India opens sugar imports, tightens stock rules after prices jump 16%

India has imposed stock limits on sugar dealers, ordered physical checks at mills and permitted duty free imports of 10 lakh tonnes of raw sugar as it seeks to contain rising prices ahead of the festive season.

The intervention follows a climb in retail sugar prices from ₹48.18 a kg on July 20 to ₹55.70 a kg on August 20, a rise of nearly 16% in a month. The government said speculation and hoarding by some mills and traders had contributed to the increase, alongside lower than expected output, seasonal demand and tighter global supplies.

Dealers across the country will be barred from holding more than 400 tonnes of sugar from August 1 to November 30. From September 1, bulk consumers will not be permitted to retain stocks exceeding 15 days of consumption. Central and state government teams are carrying out physical verification of stocks at mills to detect hoarding and artificial scarcity.

“Speculation and hoarding by some sugar mills and traders have also contributed to the recent price increase,” the government said in its statement.

The permission to import raw sugar is intended to increase domestic availability while the new crushing season approaches. The government has also advised states and mills to begin crushing from October 15, earlier than usual. It expects this to raise October sugar production from the usual 3 lakh to 4 lakh metric tonnes to more than 10 lakh metric tonnes.

The measures put the focus on whether supply can reach the market quickly enough during the period of peak festive demand. The government has maintained that current stocks are adequate to meet domestic consumption until crushing begins in October.

Will sugar supplies be enough to meet festive demand?

Sugar output this season is now estimated at about 306 lakh metric tonnes, well below the initial estimate of 343 lakh metric tonnes made by sugarcane growing states. Red Rot and Top Borer disease, along with waterlogging after excess rainfall, have hurt the cane crop.

The government said existing stocks would still be sufficient to meet domestic demand until the new crushing season begins in October. To build an additional buffer, states and mills have been advised to start crushing from October 15. That could lift October production from the usual 3 lakh to 4 lakh metric tonnes to more than 10 lakh metric tonnes.

The decision to permit raw sugar imports is a precautionary step aimed at reinforcing this supply cushion. It comes as the international market has also tightened. Global sugar prices climbed from $474 a tonne on June 30 to $552 a tonne on August 20, a rise of more than 16% in less than two months. The global deficit in 2026 27 is estimated at around 33 lakh metric tonnes, according to the government.

The government also sought to counter criticism that diversion of sugar towards ethanol production had caused the domestic price rise. It said the share of sugar diverted to ethanol had fallen to about 9% in 2025 26 from around 12% in 2022-23. Nearly three fourths of ethanol produced in the country now comes from grains, particularly maize, it said.

India typically produces 320 lakh to 340 lakh metric tonnes of sugar a year, against domestic consumption of 280 lakh to 290 lakh metric tonnes. “Diversion of excess sugar towards ethanol has helped address this structural problem,” the government said.

The improved finances of mills have translated into faster payments to cane growers. As of August 20, 97% of cane dues for the 2025 26 season had been paid, the government said. It added that no subsidy for the sugar industry had been announced since 2021 22, after about ₹14,600 crore was provided between 2014 and 2021.

With prices now rising faster than their longer-term trend of roughly 3% hoard a year between August 2024 and July 2026, the effectiveness of the new stock limits, inspections and imports will be tested in the weeks ahead.