To pre-empt a spike in sugar prices during the coming festive seasons, the government is discussing several measures including allowing limited duty-free imports and curbing the volume of sweetener bulk traders can hold.
Sugar demand usually surges between August and November due to the festive season. The food ministry is also considering curbing stocks held by bulk traders and changing monthly allocations from sugar units.
The average retail price of sugar, according to the price monitoring cell of the Department of Consumer Affairs, was Rs 52.3/kg on Tuesday, an increase of close to 13% year-on-year. In the last month, retail prices have increased by over 9%. To curb cheap imports and protect cane farmers, the government had imposed 100% basic custom duty on sugar in February 2018.
Sources said that sugar yield may be impacted due to uneven monsoon rainfall distribution in key cane-growing areas like Maharashtra and Uttar Pradesh, which is driving price sentiments. The food ministry is also physically verifying stocks at sugar mills to ascertain the actual inventory position and ensure supply chain transparency.
To curb hoarding, discourage speculative trading and ensure the continuous availability of sugar at reasonable prices, the Government imposed stock holding limits on sugar dealers from August 1 to November 30, 2026. Dealers must declare their sugar stocks and update their position weekly.
The order prohibits dealers from holding stocks exceeding 4,000 quintals of sugar for more than 30 days from the date of receipt.
“Sugar supply position for the coming months remains comfortable, and there is no fundamental concern regarding availability in the domestic market,” Deepak Ballani, Director General of the Indian Sugar & Bio-Energy Manufacturers Association (ISMA) told FE. Ballani said the recent increase in sugar prices appears unjustified and is not supported by prevailing demand-supply fundamentals.
ISMA projects the opening stock for the 2026–27 sugar season (October-September) to be around 3.5 – 4 million tonnes (MT) which should be adequate to meet domestic consumption requirements. The opening stock on October 1, 2025 was 5 MT.
Officials said that although the season commences on October 1, sugar supplies after crushing enter the market by the end of November or early December. Thus, the opening stock of sugar plays a crucial role in price stabilisation.
As per the third advance estimate of sugar production for the 2025-26 season in February, 2026, the industry projected net sugar production at 29 MT, excluding 3.1 MT diverted for ethanol. However, the final sugar production figure for the current season is likely to be released next month.
India’s annual sugar consumption is around 28 MT. Industry sources reported a shortfall in yield linked to the early onset of flowering in sugarcane in key growing regions of Maharashtra and Karnataka.
Sugarcane sowing so far this season has covered 5.83 million hectares, a marginal year-on-year decline.
The industry stated that Pan-India average ex-mill sugar prices through June were around Rs 39.5-40/kg, below the average cost of production. Even after a recent increase, the season’s average realisation through the end of July reached Rs 40-40.5/kg, still below the production cost of about Rs 42/kg, the industry pointed out.
To boost supplies during the coming festive season, the industry recommended starting sugarcane crushing for the 2026-27 season nearly 10-15 days earlier than the normal schedule and sought financial support from the government.