Govt To Allocate Fortnightly Sugar Sale Quota To Mills From Sep To Prevent Artificial Scarcity

The government on Friday said retail prices of sugar have started to ease with ex-mill rates declining by around 20% in the last few days and announced that it will allocate a fortnightly sale quota to mills from September to ensure smooth supply and prevent artificial scarcity.

At present, the food ministry allocates a monthly quota to mills for the sale of sugar.

In an official statement, the Food Ministry said it is closely monitoring availability and prices of sugar, while asserting that there is no shortage of sweetener in India.

The ministry said it carried out physical verification of stocks in sugar mills and the exercise revealed that some mills were holding more stocks than declared in monthly returns, while some mills sold less stock than their monthly allocations.

"The Government has also observed that, in certain cases, sugar sold by mills at the beginning of the month was being dispatched or lifted by buyers only towards the end of the month. This practice contributed to artificial scarcity in the market," the statement said.

To address this problem, the government has decided to introduce a fortnightly sugar allocation system from September, replacing the existing monthly quota system.

Under the fortnightly quota, mills will have to sell at least 40% of the allocation in the first week and the remaining quantity in the succeeding week. Commenting on the benefits of the new measure, the ministry said it will help to monitor the demand and supply situation, respond quickly to changes in market conditions and prevent artificial scarcity. It can release additional stocks if required to maintain adequate market availability.

"Sugar mills have already been directed to ensure that sugar sold is dispatched from the mill within seven days of sale," the ministry said.

These two measures – fortnightly quota allocation and mandatory dispatch within seven days – would significantly improve the entire supply chain.

Bulk consumers of sugar have been asked not to hold stocks in excess of their operational requirements.

Talking about the prevailing high sugar prices, the government said it has taken a series of proactive measures to ensure adequate availability of sugar and prevent artificial tightening of supplies in the domestic market.

To control prices, the Centre has recently allowed imports of 10 lakh tonnes of raw sugar by October 31. It has imposed stock holding limits on dealers, as well as bulk consumers like beverage makers. Exports were already banned a few months back.

As a result, the ex-mill sugar prices have declined by around 20% in recent days, while retail sugar prices have also started coming down.

"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 food ministry noted that the downward trend in ex-mill and retail prices proves that the recent surge was primarily on account of "hoarding and speculation".

The ministry said that a nationwide drive for physical verification of sugar stocks at mills was carried out, which reaffirmed the 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 statement said.

The ministry asserted that there is no shortage of sugar in the country and there is no justification for panic buying or excessive stocking.

In some cases, sugar mills were also found to be resorting to short selling, which means selling less sugar than the quantity allocated to them under the monthly quota.

Such practices tend to unnecessarily constrain market supplies despite adequate physical stocks.

In the next 2026-27 marketing year starting October, the ministry said that the sugarcane crushing for the new season will commence from 15th October. More than 10 lakh tonnes of sugar will be produced during the month.

Mills have been permitted to sell sugar produced during October without any restriction. This will ensure that new-season production becomes available in 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 statement said.

The government said it would take all necessary measures to ensure supply at reasonable prices across the country, particularly during the forthcoming festive season.

According to industry body ISMA, India's net sugar production (after diversion to ethanol) is estimated at around 279 lakh tonnes in the 2025-26 marketing year (October-September), while the opening stock was 50 lakh tonnes.

The annual domestic demand is projected at 280-285 lakh tonnes, while the country exported 8 lakh tonnes of the sweetener before the government imposed a ban.

ISMA has projected the closing stock at 35 lakh tonnes at the end of September.

The association noted that 30 lakh tonnes of sugar is estimated to be diverted in the current marketing year from the gross sugar output of 309 lakh tonnes.

ISMA initially estimated that the country's gross sugar output would be 345 lakh tonnes for the 2025-26 marketing year, but later revised downwards as the sugarcane crop was affected by bad weather and pests.