Sugar prices across several parts of India have climbed sharply, with retail and wholesale rates rising by around 40% and, in some markets, nearly 50% compared with the same period last year.
The steep increase has raised concerns about tightening domestic supplies just as demand is expected to rise during the upcoming festive season.
Prices have crossed Rs. 65 per kg in eight states, including Uttarakhand, Punjab, Madhya Pradesh and Odisha. Odisha recorded the highest rate on August 23 at Rs. 67.40 per kg, up from Rs. 55 a week earlier, Rs. 50.78 a month ago, and Rs. 46.89 during the corresponding period last year.
Overall, the price of sugar increased from Rs. 48.18 per kg on July 20 to Rs. 63.05 per kg on August 24, highlighting the pace of the recent rise.
Why Are Sugar Prices Rising?
The Centre has attributed the increase to several factors, not a single cause. These include lower-than-expected domestic sugar production, weather-related damage to sugarcane crops, stronger demand ahead of the festive season and tightening global sugar supplies.
The government has also pointed to speculation and hoarding by sections of the industry as factors contributing to the price rise.
Opposition parties have questioned the government's handling of the situation and have linked the increase partly to the diversion of sugarcane towards ethanol production. However, the Centre has rejected ethanol diversion as the primary reason for the current surge.
Farmers' organisations, meanwhile, have alleged that large traders may have contributed to the price increase by creating artificial supply pressure ahead of the festive period.
Centre Allows 10 Lakh Tonnes of Duty-Free Sugar Imports
To improve domestic availability, the Union Commerce Ministry has allowed the import of 10 lakh tonnes, or one million tonnes, of raw sugar under a tariff rate quota (TRQ) until October 31, 2026.
The government has now changed the rules governing these imports. Instead of requiring importers to process the raw sugar and sell the resulting refined sugar by October 31, importers will receive two months from the date of filing the bill of entry to process the raw sugar into refined sugar and sell it in the domestic market.
The revised timeline gives importers greater flexibility while maintaining the government's objective of bringing additional sugar supplies into India.
Changes to Raw Sugar Import Rules
Under the earlier August 20 notification, importers could import one million tonnes of raw sugar duty-free under the TRQ until October 31.
Importers were initially required to convert the imported raw sugar into white or refined sugar and sell it domestically by the October 31 deadline.
The Directorate General of Foreign Trade (DGFT) has now replaced that fixed deadline with a two-month processing window beginning on the date the bill of entry is filed.
The government has also permitted a one-time conversion of existing advance authorisations issued under SION E-52 into the TRQ scheme for raw sugar imported under those authorisations up to August 20.
The provision covers refined sugar already produced, as well as sugar to be produced from the imported raw sugar. The conversion remains subject to payment of the GST that was exempted at the time of import and other applicable conditions.
Sugar Stocks Fall Below Normative Buffer
The recent price increase comes amid concerns over domestic inventories. Sugar stocks are estimated at around 3.5 million to 3.9 million tonnes, significantly below the government's normative buffer of 6 million tonnes.
With the new sugarcane crushing season still some time away, lower inventories have increased pressure on available supplies. The Centre's decision to permit one million tonnes of duty-free imports is intended to bridge part of this supply gap and prevent further price escalation.
Government Tightens Checks on Hoarding
Alongside the import decision, the government has introduced measures to prevent bulk consumers and traders from accumulating excessive stocks.
From September 1, the stockholding limit for bulk sugar consumers will be halved to 15 days of consumption. The measure is intended to discourage hoarding and speculative stock accumulation.
The government has also increased monitoring of sugar mills. Mills have been asked to provide transaction-level information for sales made between August 17 and August 19, including the quantity sold, transaction prices, and buyer details.
Festive Demand Adds Pressure
The August-November period is particularly important for sugar demand as India enters its major festive season. Higher consumption during festivals could put additional pressure on already tight supplies.
The government is therefore attempting to address the situation through a combination of imports, stock restrictions and closer monitoring of the sugar trade.
The latest change to the import rules gives traders more time to process duty-free raw sugar while keeping the broader objective unchanged: increase domestic availability, prevent hoarding and stabilise sugar prices before festive demand intensifies.
