India’s gross sugar production is likely to rise by around 15 per cent in sugar season (SS) 2026 starting October to about 35 million tonne, aided by above average monsoon, boosting cane acreage and yields in key sugar producing states such as Maharashtra and Karnataka, Crisil Ratings said.
The growth is expected to ease tightness in domestic supply and has the potential to boost ethanol diversion and revive exports with appropriate policy support. This would offer sugar mills some relief from the trifecta of challenges of high cane costs, subdued ethanol prices and muted exports that compressed their operating profitability by about 200 basis points (bps) to 8.7-9 % in fiscal 2025.
In fiscal 2026, with improved supplies and potentially higher diversion of sugar for blending ethanol with gasoline, the operating margin of sugar mills is likely to recover to about 9-9.5 per cent. This should support credit profiles of sugar players, which saw some pressure last fiscal, Crisil Ratings said based on the analysis of 54 sugar mills with total revenue of around ₹70,000 crore.
