The government will shift from monthly to fortnightly sugar sale quotas for mills from September as it moves to ensure steady supplies and prevent artificial scarcity in the domestic market. The decision comes as sugar prices have begun easing, with ex-mill rates falling around 20% in recent days.
The Food Ministry said there is no shortage of sugar in the country and that it is closely monitoring availability and prices. Physical verification of stocks found that some mills held more sugar than they had declared in their monthly returns, while others sold less than their allocated monthly quota.
Fortnightly quotas to keep sugar moving
At present, the ministry allocates monthly sugar sale quotas to mills. Under the new system, mills will have to sell at least 40% of their fortnightly allocation in the first week and the remaining quantity in the following week.
The ministry said the system would help it monitor demand and supply more closely, respond quickly to changing market conditions and prevent artificial scarcity. The government can also release additional stocks if needed to maintain adequate supplies, PTI reports.
The move should give the government greater visibility over how quickly sugar enters the market instead of merely relying on monthly allocations. Its effectiveness, however, will depend on whether mills follow the sale and dispatch requirements in practice.
Seven-day deadline for dispatch
The government found that in some cases sugar sold by mills at the beginning of a month was dispatched or lifted by buyers only towards the end of the month.
“This practice contributed to artificial scarcity in the market,” the ministry said.
Sugar mills have now been directed to ensure that sugar is dispatched from the mill within seven days of its sale. The ministry expects the combination of fortnightly quota allocation and mandatory dispatch within seven days to significantly improve the supply chain.
Bulk consumers have also been asked not to hold stocks beyond their operational requirements.
Prices start cooling after government action
The government said it has taken several measures to ensure adequate sugar availability and prevent artificial tightening of domestic supplies.
It recently permitted imports of 10 lakh tonnes of raw sugar by Oct 31 and imposed stock-holding limits on dealers and bulk consumers such as beverage manufacturers. Sugar exports had already been banned a few months earlier.
Following these steps, ex-mill sugar prices have declined by around 20% in recent days, while retail prices have also started falling.
“Given the normal transmission of changes through the supply chain, retail prices are expected to follow the downward movement in ex-mill prices shortly,” the ministry said.
The ministry said the decline in ex-mill and retail prices showed that the recent surge was primarily caused by “hoarding and speculation”.
That assessment puts the focus on supply management rather than an actual shortage of sugar. With the government insisting that stocks are comfortable, its latest measures are aimed at ensuring available sugar reaches the market on time.
Stock checks uncover discrepancies
A nationwide physical verification drive at sugar mills reaffirmed what the government described as a comfortable availability position.
“In several cases, sugar mills were found to be holding stocks higher than those declared in their monthly returns submitted to the Government,” the ministry said.
Some mills were also found to be short selling, or selling less sugar than the quantity allocated to them under the monthly quota. The ministry said such practices unnecessarily constrain market supplies despite adequate physical stocks.
It asserted that there is no shortage of sugar in the country and said there was no justification for panic buying or excessive stocking.
New-season sugar to enter market in October
Looking ahead to the 2026-27 marketing year, which begins in October, sugarcane crushing for the new season is scheduled to start from Oct 15. More than 10 lakh tonnes of sugar is expected to be produced during the month.
Mills will be allowed to sell sugar produced in October without any restriction, allowing new-season output to reach the domestic market at the earliest.
“Sugar production is expected to be around 45 lakh tonnes in November, providing substantial additional supplies for domestic consumption,” the ministry said.
The expected arrival of fresh production could provide further relief to the market after the recent price rise, particularly as the festive season approaches.
The government said it would take all necessary measures to ensure sugar supplies at reasonable prices across the country, especially during the forthcoming festive season.
Production, demand remain closely matched
According to industry body Indian Sugar and Bio-energy Manufacturers Association (ISMA), India's net sugar production after diversion for ethanol is estimated at around 279 lakh tonnes in the 2025-26 marketing year from October to September. The opening stock stood at 50 lakh tonnes.
Annual domestic demand is projected at 280-285 lakh tonnes. India exported 8 lakh tonnes of sugar before the government imposed the export ban.
ISMA has projected closing stocks of 35 lakh tonnes at the end of September.
The association estimates that 30 lakh tonnes of sugar will be diverted during the current marketing year from gross production of 309 lakh tonnes.
ISMA had initially estimated India's gross sugar production at 345 lakh tonnes for the 2025-26 marketing year, but subsequently revised the estimate downwards after the sugarcane crop was affected by bad weather and pests.
With production and domestic demand running close to each other after ethanol diversion, maintaining orderly supplies will remain important. The government's fortnightly quota system represents an attempt to ensure that available stocks move through the supply chain without artificial bottlenecks.
