The nitrogen fixing bacterial endophytes Gluconacetobacter diazotrophicus and Herbaspirillum spp. have been proposed to benefit sugarcane (Saccaharum spp. hybrids) growth. Variable populations of these endophytes exist depending upon ontogenic and climatic variations as well. This study investigates the effect of variable chemical nitrogen application in soil on the population of endophytic diazotrophs, acetylene reduction ability of excised roots, plant N-nutrient use efficiency and probable interactions among different parameters in eight commercial sugarcane varieties of subtropical India. Recovery efficiency (RE), agronomic efficiency (AE), partial factor productivity (PFP) and physiologic efficiency (PE) indicators were used for accounting N-nutrient use efficiency. The population of G. diazotrophicus was more at N75 compared to N0 and N150, whereas Herbaspirillum population increased from N0 to N150. ARA was positively correlated with Gluconacetobacter population in rhizosphere and root, whereas it had poor correlation with Herbaspirillum population. Positive correlation of RE and AE with ARA of roots, Gluconacetobacter and Herbaspirillum populations in roots and stems indicate their positive contribution in total nitrogen uptake by the plant per kg of N applied. Average PFP was 808.9 at N75 compared to 408.7 at N150 indicating that N was utilized efficiently at low N input status in sugarcane. Strong positive correlations of AE75 (agronomic efficiency from 75 kg N ha−1 to 150 kg N ha−1) with N-uptake (r 2 = 0.615), cane yield (r 2 = 0.758) and PFP (r 2 = 0.758) and other parameters compared to AE (agronomic efficiency from 0 kg N ha−1 to 75 kg N ha−1 or 150 kg N ha−1) correlations with N-uptake (r 2 = 0.111), cane yield (r 2 = 0.368) and PFP (r 2 = 0.190) indicated that the AE of sugarcane was strongly directed towards producing more cane yield per unit of N fertilizer once the sugarcane plant has established using initial dose of nitrogen and thus AE75 seems to be a more appropriate indicator for accounting N-nutrient use efficiency in sugarcane.