Sugar Price Surge: Government Tightens Rules to Curb Hoarding

The government has revised rules for raw sugar imports as sugar prices continue to rise across India. Under the new conditions, imported raw sugar must be converted into refined sugar within two months, and the refined sugar must also be sold in the domestic market within the same period.

The move is aimed at preventing traders and importers from hoarding sugar and ensuring that additional supplies reach consumers quickly.

The revised rules come as the government steps up efforts to improve domestic availability and control sugar prices ahead of the festive season.

Imported raw sugar must be refined and sold within two months

The Commerce and Industry Ministry has introduced a specific timeline for importers handling raw sugar.

Under the revised conditions, imported raw sugar must be processed into refined sugar within two months of import. The refined sugar must then also be sold within the prescribed two-month period.

Earlier rules required importers to process raw sugar within a reasonable timeframe and ensure that it was available in the domestic market before October 31. The new notification replaces this broader requirement with a stricter and clearly defined timeline.

The government hopes the measure will prevent imported sugar from being stored in anticipation of further price increases.

Government allows 10 lakh tonnes of sugar imports

The Centre has already allowed the import of 10 lakh tonnes of sugar until October 31 as part of its efforts to increase domestic supply.

It has also imposed stock-holding limits on traders and bulk consumers, including companies in sectors such as soft drinks and ice cream. State governments have been directed to take action against hoarding and black marketing.

Earlier, the government also banned exports of raw, white and refined sugar until September 30 to prioritise domestic availability and stabilise prices.

Sugar prices jump nearly 29% in a month

Sugar prices have risen sharply despite India maintaining significant sugarcane production.

According to government data, the average all-India retail price of sugar stood at Rs 63.05 per kg on Monday, compared with Rs 48.73 per kg a month earlier, representing an increase of around 29%.

The maximum retail price reached Rs 75 per kg, while the model price stood at Rs 65 per kg.

Food Secretary Sanjeev Chopra said ex-mill sugar prices had also increased sharply, rising from around Rs 47-48 per kg to Rs 62 per kg within seven to 10 days. He described the sudden rise as unjustified.

Why are sugar prices rising in India?

Several factors have contributed to the recent increase in sugar prices.

Crop damage caused by pest attacks, waterlogging and excess rainfall has affected sugarcane output. Rising demand ahead of the festive season and speculative buying have also added pressure to prices.

The government's latest estimate puts sugar production for the 2025-26 marketing year at around 306 lakh tonnes, significantly lower than the earlier estimate of 343 lakh tonnes.

Meanwhile, the Indian Sugar and Bio-Energy Manufacturers Association has maintained that there is no actual sugar shortage in the country.

The industry body estimates net sugar production, after diversion towards ethanol, at around 279 lakh tonnes, with opening stocks of approximately 50 lakh tonnes. Domestic consumption is estimated at 280-285 lakh tonnes.

Opposition targets ethanol policy over sugar prices

Opposition parties have linked the rise in sugar prices to the government's ethanol-blending policy, arguing that the diversion of sugar towards ethanol production has reduced availability for domestic consumers.

The government has rejected these claims.

Food Secretary Sanjeev Chopra said it was incorrect to blame the entire price increase on ethanol diversion. According to the government, the ethanol programme has strengthened the financial position of sugar mills and helped ensure timely payments to sugarcane farmers.

The Centre maintains that weather-related crop damage, pest attacks, demand and speculative buying have played a larger role in the recent price surge.

Government aims to increase supply before festive season

With sugar prices rising rapidly, the government is attempting to increase supplies while preventing imported sugar from being hoarded.

The stricter two-month processing and sale requirement, combined with 10 lakh tonnes of permitted imports, stock limits and action against black marketing, forms part of a broader effort to bring prices under control.

The effectiveness of these measures will now depend on whether additional sugar reaches the market quickly enough to ease pressure on consumers during the upcoming festive season.