India's sugar production is projected to rebound significantly in the 2025-26 season, with estimates suggesting an 18% increase to 34.9 million tonnes. This expected surge follows a period of lower output, with the current season (2024-25) seeing a five-year low of 29.5 million tonnes. The Indian Sugar and Bio-Energy Manufacturers Association (ISMA) anticipates this recovery, driven by improved sugarcane planting and favorable weather conditions in key producing states like Maharashtra and Karnataka.

Several factors contribute to this optimistic outlook. Enhanced cane planting, supported by a strong monsoon season in the previous year, has set the stage for a timely start to the crushing season in October 2025. The Indian Meteorological Department has also forecast an above-normal southwest monsoon for 2025, which is crucial for sugarcane cultivation. Furthermore, efforts to replace cane varieties in Uttar Pradesh and other northern states are expected to boost yields and recovery rates, contributing to sustainable sugar production.

ISMA assures that the anticipated increase in sugar production will ensure sufficient supply for both domestic consumption and ethanol production. Domestic demand for sweetener in the current season is projected at 28 million tonnes, with exports around 0.9 million tonnes. Despite lower-than-expected production this season, carry-forward stocks are expected to be in the range of 5.2 to 5.3 million tonnes on October 1, 2025, which should be adequate to meet domestic demand for the first two months of the 2025-26 season.

The government has also played a role in supporting the sugar industry. In January 2025, the government allowed the export of one million tonnes of sugar in the ongoing 2024-25 season, after considering domestic availability and diversion towards ethanol production. Earlier in the month, a 4% hike in the fair and remunerative price (FRP) of sugarcane was approved, increasing it to Rs 355/quintal for the 2025-26 sugar season.

Looking at the broader picture, the projected increase in sugar output has the potential to ease tightness in domestic supply, boost ethanol diversion, and revive exports with appropriate policy support. Crisil Ratings estimates that exports, which were restricted to one million tonnes in the 2025 season due to domestic supply concerns, are likely to continue at similar levels in the 2026 season. However, any easing of export curbs will depend on decisions regarding ethanol diversion, adequate domestic availability, benign inflation trends, and favorable global price parity.

As of mid-March 2025, nearly 80% of cane payments for the current season have been cleared, and 99.9% of cane payments for the 2023-24 season have been completed. This indicates a healthy financial situation for sugarcane farmers, further encouraging increased planting and production. Overall, the Indian sugar industry appears to be on a positive trajectory, with favorable weather conditions, government support, and industry initiatives paving the way for a robust 2025-26 season.