A sustained rise in sugar costs caused by a drop in domestic production may force fast-moving consumer goods companies to increase prices of products including biscuits and chocolates, experts said.

The prospect of higher product prices comes soon after FMCG companies passed on the benefit of lower raw material costs to consumers.

“If sugar prices continue to rise, companies may face challenges as the cushion provided by passing on benefits to consumers from reduced input costs might diminish,” said Mayank Shah, vice president at Parle Products, the maker of Parle-G biscuits and Hide & Seek chocolate chip cookies.

The government estimated sugar production will decline to 32.3-33 million tonnes in the 2023-24 season (October-September) from 37.3 million tonnes in the previous season. Sugar production in the first three months of the 2023-24 season declined 7.7 percent to 11.2 million tonnes, the Indian Sugar Mills Association was cited as saying in media reports.