New Delhi [India], June 21 (ANI): India's sugar industry is facing a tighter supply-demand situation as production has fallen sharply from its peak while domestic consumption continues to rise, according to a sector note by Exencial Research Partners.

The report, titled 'India Sugar: The Squeeze, The Cycle, The Shift', said sugar output has declined around 18 per cent from its FY22 peak, even as domestic demand has climbed to record levels.

'Output has slipped ~18% from FY22 peak, while domestic demand keeps climbing. Buffer stocks are now back to multi-year lows,' the report said.

According to the sector note, India's sugar production fell to 29.3 million tonnes (MT) in FY25, an 8 per cent year-on-year decline and a four-year low. In contrast, domestic consumption reached a record 29.0 MT in FY24, reflecting continued growth in demand.

The report highlighted that the industry's supply cushion has narrowed significantly over the past few years.

'The cushion between supply and demand has shrunk to ~0.3 MT in FY24, the tightest in a decade,' the report noted.

Data in the report showed that sugar production peaked at 35.8 MT in FY22 before declining to 32.8 MT in FY23, 32.0 MT in FY24 and further to 29.3 MT in FY25.

The report said the industry's outlook now depends heavily on the upcoming crop cycle and government policy decisions.

'With FY25 cane output below ISMA's earlier estimate, the cycle now hinges on FY26 monsoon & ethanol diversion policy,' it added.

On the export front, the report said India's sugar export revenues remain well below their FY23 peak, although there are signs of stabilisation.

'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.

India's sugar export revenue stood at USD 2.09 billion in FY26, down 64 per cent from the FY23 peak of USD 5.77 billion. However, export earnings in the March 2026 quarter rose 34 per cent quarter-on-quarter to USD 593 million, indicating a recovery in trade activity.

The report also pointed to a shift in India's sugar export destinations. While Indonesia and Bangladesh were among the largest buyers during the FY22 export boom, African and Gulf nations now account 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.

Among the leading destinations in FY26 were Somalia, Sudan, Djibouti, Sri Lanka, Tanzania and the UAE, highlighting a changing geography of India's sugar trade. (ANI)