Indian mills produced 11.21 million metric tons of sugar between Oct. 1 and Dec. 31, down 7.6% from the previous year, on lower production in key producing states Maharashtra and Karnataka, a leading industry body said on Tuesday.

Maharashtra's sugar production fell to 3.82 million tons from 4.74 million, while Karnataka's production dropped 10.1% to 2.4 million tons, the National Federation of Cooperative Sugar Factories said in a statement.

Production in the northern state of Uttar Pradesh rose 12.5% to 3.5 million tons as mills started operations early, it said.

India's sugar output this crop year, hit by weak rains, is set to lag consumption for the first time in seven years, according to traders and a survey of farmers, and lower plantings may even force the world's No.2 producer to import the following year.

India has decided to allow sugar mills to divert up to 1.7 million tons of sugar for ethanol production as New Delhi aims to reduce disruptions in its ambitious biofuel programme.

With Prime Minister Narendra Modi facing election next year, India, which is highly sensitive to food inflation, is likely to ban sugar exports, the first restriction on exports since 2016. (Reporting by Rajendra Jadhav; editing by Jason Neely)