India sugar supply tightens as output falls 18%, demand hits record highs
Sugar output declines sharply while domestic consumption reaches record highs, tightening India’s supply-demand balance and reshaping export flows toward Africa and Gulf markets, according to sector analysis.
INDIA – India’s sugar industry is tightening as output declines while domestic consumption continues to rise, according to a sector note by Exencial Research Partners titled “India Sugar: The Squeeze, The Cycle, The Shift.”
According to the report, sugar production has fallen sharply from its FY22 peak, declining by around 18 per cent over the period.
Domestic demand, however, has continued to climb to record levels, further tightening the supply-demand balance in the market.
The report noted: “Output has slipped ~18% from FY22 peak, while domestic demand keeps climbing. Buffer stocks are now back to multi-year lows,” highlighting the tightening buffer stocks.
The sector note also highlighted that the gap between supply and demand has narrowed significantly, with the cushion falling to just 0.3 million tonnes in FY24, the tightest in a decade.
Industry outlook now depends on the upcoming crop cycle, with the report pointing to FY25 cane output below earlier estimates and increased reliance on monsoon performance and ethanol diversion policy.
On the export front, revenues have remained significantly below recent peaks, although there are signs of stabilisation in quarterly performance.
“FY26 export revenues tracked sideways for three quarters, then surged +34% QoQ in Mar-26 — the biggest sequential jump since the FY22 boom unwound,” the report said.
Export earnings stood at US$2.09 billion in FY26, marking a 64 per cent decline from the FY23 peak of US$5.77 billion.
Export destinations have also shifted significantly, with Africa and Gulf countries now accounting for the bulk of shipments.
During the FY22 boom, Indonesia & Bangladesh anchored exports. In FY26, Africa & the Gulf are doing the heavy lifting — six of the top seven destinations,” the report said.
Overall, the sector note indicates a structurally tighter sugar market in India, shaped by declining production, steady consumption growth, reduced buffer stocks, and shifting trade flows.
With output trending lower from FY22 highs and demand remaining elevated, the industry’s balance continues to depend on seasonal factors, policy interventions, and global demand dynamics.
The report suggests that near-term performance will be closely tied to agricultural output trends and export demand recovery across key international markets, particularly in Africa and the Gulf region.
It added no additional forecasts beyond the current cycle dependency on weather and policy decisions across domestic and international sugar market conditions in the period ahead analysis.
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