The leading sugar trade organization expects sugar production to fall by up to 8 percent in the current marketing year, which begins October 1.
Indian Sugar Mill Association (ISMA), a trade body, said that lower rainfall in sugarcane-producing states might reduce output to around 33.7 million tonnes.
"Sugar production for 2023/24, without taking into account the diversion to ethanol, is estimated at around 33.7 million tons, compared to 36.6 tons estimated for 2022/23," the ISMA stated.
In August, the ISMA had forecast sugar production of 36.2 million tons in the current season.
"Since the last marketing year, sugar mills have diverted 4.1 million tons of sugar for ethanol production, and a similar allocation could bring the new season's output to 29.6 million tons," ISMA said.
In August, India has implemented restrictions on the export of sugar.
Why is Sugar Important For India?
Sugar is the second largest industry in India after cotton textiles and employs about seven percent of the rural population.
Uttar Pradesh accounts for nearly 50% of India's total sugarcane area. Other states such as Maharashtra and Tamil Nadu each account for 12%, while Karnataka has 9% and Andhra Pradesh 6%.
Low sugar production could force India to limit India's sugar export quota.
Although the trade organisation did not provide an exact figure for total sugar production, it confidently stated that the country's output would surpass the annual consumption of 27.85 million tonnes.