The Indian government has announced a record 13.5 lakh tonnes sugar quota for domestic sales during September 16-30, bringing the total September allocation to 26.5 lakh tonnes - the highest ever for the month. According to The Hindu BusinessLine, this decision is viewed as an effort to cool retail prices ahead of Dussehra festival on October 20. Sugar stocks experienced significant pressure on Tuesday, with major players declining up to 3% amid growing concerns over tighter supplies in the upcoming season. Avadh Sugar & Energy led the decline with a 2.79% drop, while Bajaj Hindusthan Sugar fell 2.05% and Shree Renuka Sugars slipped 2.01%. The broader sector weakness reflects investor concerns about supply constraints and regulatory changes affecting the industry.
The government has significantly relaxed stockholding limits for bulk consumers, allowing them to maintain 30 days of sugar inventory instead of the previous 15 days limit. According to the Food Ministry statement, bulk consumers using over 10 tonnes of sugar per month as raw material can now hold 50 tonnes from domestic mills and an additional 50 tonnes from refiners who imported raw sugar at zero duty under AAS and TRQ schemes. However, the government has specified that any additional sugar stocked beyond the existing 15-day limit must be sourced only from imported sugar. This decision is intended to strike a balance between bulk consumer interests and market stability, providing greater operational flexibility during the upcoming festival season while ensuring additional stocks are sourced from imported sugar rather than domestic supplies. The ministry emphasized that this measure will ensure uninterrupted availability of sugar for industrial consumption without adversely affecting domestic supplies.
The Directorate-General of Foreign Trade (DGFT) has extended the deadline for sugar importers to surrender their quota until September 30, imposing a 0.5% fee on surrendered quantities. As reported by The Hindu BusinessLine, this extension provides relief to importers who may be unable to utilize their full allocation under the 10 lakh tonne TRQ scheme. The government has also relaxed the sugar stockholding limit for bulk consumers from 15 days to 30 days, subject to the condition that excess stock beyond 15 days must be sourced exclusively from sugar imported under Advance Authorisation Scheme (AAS) and Tariff Rate Quota (TRQ). The stockholding limit for open market purchases remains unchanged at 15 days consumption only. The government has implemented a mechanism for weekly disclosure of sugar stocks every Friday through the Department of Food and Public Distribution's online portal.
Government officials have attributed the current price surge to hoarding rather than genuine demand increases, with Ashwini Srivastava from the Food Ministry blaming the rise on anticipatory stockpiling ahead of festival season. Following various measures including permitting duty-free import of 1 million tonnes of raw sugar, retail prices have dropped below ₹60 per kg since last weekend. According to the government, retail sugar prices have declined by around 10%, with prices falling from approximately ₹65 per kg in August to ₹58.50 per kg currently. However, sugar prices at the mill level have declined by around 25% during the same period, and the government has noted that the reduction in prices at the mill level has not yet been fully reflected in retail prices. The Food Ministry has issued strict compliance requirements, asking mills with unsold quota to submit detailed explanations within two days and warning non-compliant mills may not receive October 2026 allocations.
Despite significant price corrections at the mill level, retail sugar prices have declined by only 10% from their peak of ₹65 per kg in August to ₹58.50 per kg, while ex-mill prices have already fallen by nearly 25% during the same period. In a joint meeting with representatives of Indian Sugar & Bio-Energy Manufacturers Association, National Federation of Cooperative Sugar Factories and All India Sugar Trade Association on Friday, Food Secretary Sanjeev Chopra emphasized that the reduction in ex-mill prices has not yet been fully transmitted through the supply chain to consumers. The food department indicated to industry that the decline in retail prices had not kept pace with the sharp fall in ex-mill prices, noting that while ex-mill sugar prices have dropped by nearly 25%, the benefit has not been fully passed on to consumers through the supply chain. The government has made a strong appeal to the sugar trade, wholesalers and retailers to immediately pass on the benefit of the significant reduction in ex-mill sugar prices to consumers, emphasizing that the decline in retail prices must keep pace with the correction already achieved at the mill level.
