India tightens sugar stock limits to 15 days for dealers and bulk consumers

Mumbai: India has tightened sugar stockholding rules for bulk consumers after prices rose sharply ahead of the festive season. From September 1, large users will be allowed to keep only 15 days of sugar stock.The order, issued by the Department of Food and Public Distribution on August 19, will remain effective until November 30, 2026.Who will be covered?The restriction applies to businesses consuming more than 10 metric tonnes of sugar every month. These include sweet makers, confectionery companies, soft drink manufacturers, food processors and other institutional buyers.Such businesses cannot hold sugar exceeding their requirement for 15 days. However, institutions operated by the Centre, states, Union Territories and local bodies are exempt.The government will verify purchases using mill sales data and Goods and Services Tax returns filed by sellers and buyers.Why was the limit imposed?The government believes the recent increase in ex-mill sugar prices is not supported by actual demand and supply conditions. India Bans Sugar Exports Till September 30, 2026, To Ensure Domestic Availability & Stabilise PricesIt said hoarding, speculative deals and paper trading without the physical movement of sugar created an artificial impression of shortage. These activities allegedly pushed up wholesale and retail prices.Dealers were already placed under separate stock restrictions from August 1. They must declare their inventories and update stock details every week on the government’s online portal.Prices reach record levelsIndian sugar prices have jumped about 10 percent over the past month to record levels, Reuters reported.The average ex-mill price reached Rs 5,400–Rs 5,500 per quintal on August 18, against nearly Rs 3,900 a year earlier. The average retail price rose 13 percent year-on-year to Rs 52.30 per kg from Rs 46.34. Three More Sugar Mills From Maharashtra & Karnataka End Abuse Of Bulls To Transport Sugarcane; Join PETA India's 100% Bull-Free MovementFestive demand adds pressureSugar demand generally increases between August and November due to Ganesh Chaturthi, Dussehra and Diwali. Biscuit, sweet and confectionery manufacturers also build inventories during this period.Patchy rainfall and dry weather have raised concerns about the sugarcane crop ahead of the 2026–27 season beginning October 1. The government is reportedly considering limited duty-free imports to improve supplies and control prices.

The Union government has tightened sugar stockholding limits once again as it seeks to contain record-high prices and ensure adequate supplies ahead of the festive season.According to a notification issued by the Department of Food and Public Distribution on August 19, dealers and bulk consumers using more than 10 metric tonnes of sugar a month will not be permitted to hold inventories for more than 15 days.The new restriction will take effect from September 1 and remain in force until November 30, 2026. It replaces the 30-day stockholding limit introduced by the government last month.Decision Should Not Be Influenced By Corporate Pressure: SC Gives 2 Weeks To Govt To Implement Warning Labels On High-Sugar, High-Salt Foods Who Will Be Covered Under New Sugar Stock Limits?The latest order covers bulk consumers and dealers that have consumed an average of at least 10 metric tonnes of sugar a month over the past year, excluding the current month.The category includes confectionery manufacturers, soft drink companies, food processing businesses, sweet manufacturers and other institutional buyers.Government institutions at the central and state levels, Union Territory administrations and local bodies have been exempted from the order.The government will monitor sugar purchases and stocks by verifying the quantities supplied by mills to bulk consumers, either directly or through dealers. Consumption will be assessed using GST returns and the applicable Harmonised System of Nomenclature (HSN) code for sugar. Festive Demand Pushes Sugar Prices HigherThe move comes as sugar consumption traditionally rises between August and November, when festivals such as Ganesh Chaturthi, Dussehra and Diwali boost demand for sweets, beverages, biscuits and other processed foods.Despite the earlier 30-day inventory restriction, sugar prices have continued to climb. Prices have increased around 10% over the past month, reaching a record level, with tight supplies and stronger festive demand expected to keep prices elevated in the coming months.The government is also considering additional measures to improve domestic availability, including limited duty-free sugar imports. Such a move could potentially allow India to import significant quantities of sugar for the first time in nearly a decade.

Sugar stocks rallied up to 8% on Thursday after the government tightened inventory limits, barring dealers handling more than 10 metric tonnes of sugar per month from holding stocks for over 15 days.Bajaj Hindusthan Sugar shares rose around 8% to Rs 22, while Shree Renuka Sugars and Dhampur Sugar Mills gained 6-7%. Balrampur Chini Mills climbed over 3%, while EID Parry India advanced nearly 2%.Why are sugar prices rising?India’s sugar demand typically rises between August and November as the country celebrates festivals such as Ganesh Chaturthi, Dussehra and Diwali, driving demand for sweets, biscuits and other confectionery products. Manufacturers of these products also build inventories ahead of the festive season, further supporting sugar demand.Last month, the government directed dealers to hold sugar stocks for no more than 30 days to bolster supplies. Despite the move, sugar prices have risen 10% over the past month to record highs, with analysts expecting prices to remain elevated for at least the next three months. Meanwhile, patchy rains and dry weather conditions have affected sugarcane output. Since the crop requires substantial water for irrigation, concerns over supply have added to upward pressure on prices.Also read |India tightens sugar stock limits to tame record pricesThe worsening supply outlook in Brazil, the world’s largest sugar producer, has also triggered a sharp rally in sugar prices. The country has warned of a delay in the harvest due to adverse weather conditions.Adding to the uncertainty, Brazil has suspended its bi-weekly harvest and production reports, limiting visibility into the country’s supply outlook.Meanwhile, a shift towards ethanol is adding to concerns over a potential sugar supply crunch. In June, 58% of Brazil’s cane juice was diverted towards ethanol, which is expected to offer better profitability than sugar. Brazil also raised its mandatory ethanol blending target to 32% in July from 30% in June, significantly above the 25-27% levels seen just months earlier.India to cut sugar import duty?India, the world’s second-largest producer of sugar, is considering reducing its import duty on the commodity to help curb domestic prices that recently climbed to a record, Bloomberg reported. Officials are weighing plans to lower or scrap the 100% tax on inbound shipments in an effort to boost local supplies, the report said, citing sources. This come just before a seasonal surge in sugar demand for the festival season, adding to the incentive to rein in rising prices.Also read | Why is market rising today? Sensex rallies 500 points, Nifty tops 24,200. 5 key factors behind market rebound(With inputs from agencies)(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)

The Union government has imposed stricter sugar stockholding limits to combat soaring prices ahead of the festive season, reducing allowable inventories to 15 days for dealers. Details here.