Sugar Stocks See Profit Booking As Govt Relaxes Duty-free Import Rules

Sugar stocks witnessed profit booking on Tuesday, with Balrampur Chini Mills, Bajaj Hindusthan Sugar, Shree Renuka Sugars and other companies falling up to 7% after the government eased rules governing duty-free imports of raw sugar.

The move gives importers greater flexibility to process imported raw sugar into refined sugar and sell it in the domestic market. The government is seeking to improve supplies and curb hoarding as sugar prices have risen sharply ahead of the festive season.

Government Eases Import Rules

Under its August 20 notification, the government had allowed duty-free imports of up to 1 million tonnes of raw sugar under a tariff-rate quota (TRQ) until October 31, 2026.

Importers were required to refine the imported sugar into white sugar and sell it domestically by the same deadline. The Directorate General of Foreign Trade (DGFT) has now replaced the fixed October 31 deadline with a two-month window from the date of filing the Bill of Entry.

The change is expected to provide importers with greater flexibility in processing raw sugar and supplying the refined product to the domestic market.

The government has also allowed a one-time conversion of existing Advance Authorisations issued under SION E-52 into the TRQ scheme.

Sugar Stocks Retreat After Rally

Sugar stocks had rallied sharply this month, with the entire pack gaining around 20%-30%, before seeing profit booking on Tuesday.

Balrampur Chini Mills, EID Parry and Triveni Engineering shares were trading 1.8%-3.5% lower.

Bajaj Hindusthan Sugar fell 6.19%, while Shree Renuka Sugars and Bannari Amman Sugars declined 3.22% and 2%, respectively.

The government measures could increase domestic sugar availability and potentially limit the benefit of elevated realisations for sugar producers.

Prices Rise Ahead Of Festive Season

Sugar prices rose to ₹63.05 per kg on August 24 from ₹48.18 per kg on July 20 amid tighter supplies and increased demand ahead of the festive season.

The government has attributed the increase to lower-than-expected sugar production, weather-related crop damage, concerns over global supplies and hoarding. It has dismissed the diversion of sugar towards ethanol as the primary reason for the price rise.

Domestic sugar inventories are estimated at 3.5-3.9 million tonnes, below the government's normative buffer stock requirement of 6 million tonnes.

From September 1, the stockholding limit for bulk sugar consumers will be reduced by half to 15 days of consumption. The government has also directed sugar mills to submit transaction-level details of sales conducted between August 17 and 19, including quantities sold, prices and buyer information.