India cuts sugar stock limit to 15 days: What it means for prices and supply

India has tightened sugar stockholding rules for bulk consumers as sugar prices rise ahead of the festive season, with the government limiting inventories to 15 days for businesses that use or consume more than 10 metric tonnes of sugar a month.The new order was issued by the Department of Food and Public Distribution on August 19 under the Essential Commodities Act, 1955. It will come into effect on September 1 and remain in force until November 30.The latest order applies specifically to bulk consumers. These include confectioners, soft drink manufacturers, food processing industries, sweetmeat sellers and other institutional buyers whose average monthly sugar consumption during the previous year, excluding the current month, was at least 10 metric tonnes.Any such bulk consumer using or consuming more than 10 metric tonnes of sugar a month as a raw material for production, consumption or other use cannot hold stocks for more than 15 days for that consumption or use.Institutions belonging to the Central Government, state governments, Union Territory administrations and local bodies are exempt from the order.The government will verify the quantity of sugar sold by each mill to bulk consumers, either directly or through dealers. Consumption will be determined using Goods and Services Tax returns filed by sellers and buyers, with reference to the relevant Harmonised System of Nomenclature (HSN) code for sugar.Dealers already restrictedThe latest measure follows a separate order issued in July covering sugar dealers across the country. That order came into effect on August 1 and will remain in force until November 30.The government said the earlier action was aimed at curbing hoarding, discouraging speculative trading, ensuring continuous availability of sugar at reasonable prices and protecting consumer interests. It also sought to maintain orderly domestic supplies and ensure that genuine trade and distribution activities continued without disruption.The government said the recent increase in ex-mill sugar prices was not supported by prevailing demand-supply fundamentals. It said hoarding by some traders, dealers and market intermediaries, along with speculative transactions and paper trading without actual physical movement of sugar from mills, had created an artificial perception of scarcity.The government said these practices had contributed to price volatility and higher ex-mill and retail sugar prices. It has maintained that adequate sugar is available to meet domestic consumption requirements.Dealers are required to declare their sugar stocks and update their stock position every week through the Department of Food and Public Distribution’s online portal. The government said it would continue to monitor the market and take measures to ensure adequate supplies at reasonable prices.Prices riseThe latest tightening comes as sugar prices continue to rise despite the earlier stockholding restrictions. Indian sugar prices have increased about 10% over the past month to a record high, according to Reuters.The all-India average ex-mill sugar price reached ₹5,400-5,500 per quintal on August 18, compared with ₹3,900 a year earlier, according to an industry body. The average retail price rose 13% year-on-year to ₹52.30 per kg on August 18 from ₹46.34, according to Consumer Affairs Ministry data.The government is also considering other measures to improve domestic supplies and contain prices. These include limited duty-free imports and other changes to sugar availability, according to Reuters. The government is considering the measures ahead of the period when domestic demand normally increases.Festive demandSugar demand in India, the world’s biggest sugar consumer, typically rises between August and November as Ganesh Chaturthi, Dussehra and Diwali drive demand for sweets and confectionery. Bulk users such as biscuit and confectionery manufacturers also build inventories ahead of the festive season.The latest stock limit also comes ahead of the 2026-27 sugar season, which begins on October 1. Patchy rainfall and dry weather have affected sugarcane crops, adding to concerns over supplies for the coming season.The government has said its stockholding measures are intended to prevent hoarding and speculative activity, protect consumers, maintain price stability and ensure a transparent and efficient sugar supply chain.

Source link