On Friday, the government dismissed allegations that diverting sugar for ethanol production was causing a steep increase in sugar prices. It stated that reduced domestic production, heightened festive demand, and hoarding were the real reasons behind the decision to impose stock limits and permit duty-free imports to keep prices in check.

The Ministry of Consumer Affairs, Food & Public Distribution stated in a release that linking the recent rise in sugar prices to the diversion of sugar for ethanol production is inaccurate.

The proportion of sugar used to produce ethanol for blending with petrol has actually fallen to about 9 per cent in the 2025-26 season from roughly 12 per cent in 2022-23, while nearly three-quarters of India’s ethanol output now originates from grains, especially maize, it said.