• Domestic production drop: Indian sugar production is projected to decline by 2.5 to 3 million tonnes to around 27–27.5 million tonnes due to severe drought in Karnataka and Maharashtra, potentially turning India into a net importer.
• Price band controls: Domestic sugar prices are expected to remain range-bound between ₹44 and ₹46 per kg due to proactive government measures, while the minimum selling price remains stagnant at ₹31 per kg despite rising FRP.
• Ethanol diversion unviability: Sugar diversion toward ethanol will remain halted unless ethanol prices are revised upward to ₹71–₹72 per litre against current sugar values of ₹44–₹45 per kg.
• Demand and inventories: Sugar festival demand is experiencing headwinds and contraction, while mandatory inventory offloading by bulk consumers is likely to push India's October 1 closing stocks above the estimated 3.2 million tonnes.