India's central government has rejected claims that ethanol diversion is driving a sharp rise in domestic sugar prices, saying the share of sugar diverted for ethanol blending has fallen to around 9% this season from about 12% in 2022-23. Nearly three-quarters of India's ethanol now comes from grains, particularly maize. Retail sugar prices rose from Rs 48.18 per kilogram on July 20 to Rs 55.70 on August 20, while traders in Kolkata reported prices reaching Rs 70 per kilogram by Friday. The government attributes the increase to expected domestic production of around 30.6 million tonnes, below the initial estimate of approximately 34.3 million tonnes; crop damage from Red Rot and Top Borer diseases and waterlogging caused by excess rainfall; stronger demand ahead of Dussehra and Diwali between September and November; tighter global supplies; and speculation and hoarding. International sugar prices rose more than 16% to $552 a tonne on August 20 from $474 on June 30, partly because of weaker Brazilian production, while the government estimates a global sugar deficit of about 3.3 million tonnes in 2026-27. Measures include a 400-tonne stock limit for sugar dealers until November 30, a 15-day stock ceiling for bulk consumers from September 1, duty-free imports of 1 million tonnes of raw sugar by October 31, and physical stock checks at mills. Food Secretary Sanjeev Chopra said the measures are precautionary. The ministry said supplies are sufficient until the new crushing season begins in October, with October production expected to exceed 1 million tonnes if crushing starts from October 15, compared with usual monthly output of 300,000 to 400,000 tonnes. Trade groups in West Bengal and some industry participants continue to cite ethanol diversion, mill hoarding and global supply constraints. The government says the ethanol programme has reduced structural sugar surpluses, strengthened mill finances and improved payments to farmers, with 97% of sugarcane dues for 2025-26 paid as of August 20. Whether the controls and imports lower prices before the festive rush remains uncertain.