India is now expected to miss its 1 million-ton sugar export quota for the season, shipping around ~775,000 tonnes by Sept 30, 2025. This shortfall is driven mainly by a surge of cheaper Brazilian sugar that pushed global prices to four-year lows, undercutting Indian offers.

So far Indian mills have shipped ≈720,000 t and contracted ≈750,000 t, leaving only limited deals likely before the season closes; mills may seek permission to roll over the unsold quota into the next season. Reuters

At the same time, global supply expectations remain large: Brazil is forecast to export and produce at elevated levels (Brazil 2025/26 production/export forecasts were strong in USDA/FAS reporting). Foreign Agricultural Service

India’s domestic picture is mixed: agencies/projects forecast a strong rise in Indian sugar output for 2025/26 (good monsoon, higher yields), and policy moves are pushing diversion to ethanol (and removing some ethanol caps) both affect how much sugar remains for export.

For decades, India has been the world’s second-largest sugar producer, after Brazil.

• In the early 2000s, India exported barely 1–2 million tons annually; much of the production was consumed domestically.

• By 2017–18, with surplus output and supportive government incentives, exports crossed 5 million tons.

• In 2020–21 and 2021–22, exports reached record highs of 10–11 million tons, riding on global shortages and strong demand.

• But in the last two years, the government capped exports at 6.1 million tons (2022–23) and 1 million tons (2024–25) to protect domestic supply and ensure ethanol blending.

This history shows a pattern: India’s export story has been cyclical, often swinging between boom years and controlled restraint.

Brazil’s harvests and exports have been large; their sugar often trades ~$20–$30/ton cheaper on FOB terms than Indian cargoes, making buyers choose Brazilian shipments. That pricing gap directly reduces Indian competitiveness. Global sugar availability and stocks forecasts kept prices subdued, reducing buyers’ appetite to pay premiums for Indian sugar. (OECD/USDA trackers have flagged rising global output.) Foreign Agricultural Service

India historically had an edge to some Asian markets due to shorter freight; but when FOB price differentials widen significantly, even freight advantages can’t offset the Brazil price edge. India’s push to expand ethanol blending (including policy changes that allow ethanol from cane juice/more feedstocks) changes how mills allocate cane between sugar and ethanol and sometimes reduces the volume mills want to sell as raw sugar at low international prices. Conversely, ethanol procurement rules (and disputes over which mills get preferential offtake) affect mill cash flows and selling behaviour. Many export contracts are fixed earlier; once global prices fall, buyers delay or choose alternate origins. That leaves mills with unsold or uncompetitive sugar near the quota deadline.

Impacts

• Mills’ margins squeezed: unsold sugar + elevated domestic costs (India’s per-kg production cost is often higher than Brazil’s) compress profitability; this increases pressure to sell to ethanol or take lower export prices.

• Farmers / cane arrears risk: if mills’ cash flows fall, payments (arrears) to cane growers could slow down — a recurring social & political risk in Indian sugar belt states. The Economic Times

• Potential government interventions: export quota roll-overs, incentives/subsidies, or changes to ethanol procurement rules may be sought to stabilize the sector. Mills have signalled they may ask to roll unsold quota forward.

• Market rebalancing: with good monsoons and likely higher Indian crop next season, unless India diverts more to ethanol, global markets may see continued pressure (keeping prices low).

Structural / policy & investment (medium-to-long term)

1. Cut cost of production — invest in mechanization, better varieties, efficient irrigation to lower ₹/kg of sugar and narrow the cost gap with Brazil. The Economic Times

2. Improve logistics & port competitiveness — reduce turnaround, lower freight premium and pass savings to buyers.

3. Scale up value-added products — refined sugar, specialty sugars, molasses derivatives, bio-ethanol, biochemicals, sustainable aviation fuel feedstocks — move up the value chain. Biofuels International+1

4. Stable ethanol procurement rules & predictable pricing — ensure transparent, non-discriminatory ethanol offtake from all mills (govt/OEMs) so ethanol becomes a true outlet during low sugar price periods. Industry groups are already pressing for fairer procurement. The Times of India

5. Export support & trade policy — temporary incentives, freight subsidies for targeted markets, or contractual support could help bridge pricing gaps in extreme downturns.

What It Means for Farmers and Consumers

Behind every ton of sugar are millions of cane farmers. When mills export less, their cash dries up, and arrears to farmers grow. For rural households, even a delay of 2–3 months in cane payments can be devastating affecting education, healthcare, and debt cycles.

For consumers, however, the shortfall in exports may mean stable or slightly lower domestic sugar prices, easing household budgets before festivals. The story of sugar is therefore not just about trade it’s about the push and pull between urban consumers and rural producers.

Growth or Glass Ceiling ?

Analysts project India’s sugar production could rise significantly in 2025–26, thanks to good monsoons and higher yields. Optimists argue this surplus will strengthen exports again. But reality may differ:

• If global prices remain low, surplus sugar will be hard to sell competitively.

• Ethanol diversion is growing: India targets 20% ethanol blending by 2025–26, but inconsistent procurement and pricing have left mills cautious.

• Structural inefficiencies high production costs, fragmented mills, and outdated logistics may prevent India from fully capitalizing on future surpluses.

So, while industry forecasts speak of continued growth, whether India can achieve them depends not just on cane harvests but on policy stability and global demand cycles.