Sugar stocks capped at 15 days as E20 cane diversion fuels prices, import push

The Centre has capped sugar stocks held by bulk consumers at 15 days’ consumption as prices surge ahead of the festive season, with cane diversion for the E20 programme tightening supplies and raising the prospect that India, traditionally a sugar exporter, may have to turn to imports.

The restriction will come into effect on 1 September and remain in force until 30 November, according to a notification issued by the Ministry of Consumer Affairs, Food and Public Distribution.

Under the order, businesses consuming more than 10 metric tonnes of sugar a month as a raw material or for production cannot hold stocks exceeding their requirement for 15 days.

The government has classified confectioners, soft-drink manufacturers, food-processing companies, sweetmeat sellers and other institutional buyers as bulk consumers if their average monthly consumption was at least 10 metric tonnes during the preceding year, excluding the current month.

Institutions operated by the central and state governments, Union Territory administrations and local bodies have been exempted from the restriction.

The intervention comes as sugar prices reach record levels in some markets even before demand for sweets and processed foods peaks during Ganesh Chaturthi, Dussehra and Diwali. India, traditionally a sugar exporter, is also reportedly considering imports to strengthen domestic supplies.

According to a Reuters report, the government is considering removing the 100 per cent import duty on sugar, a move that could pave the way for overseas purchases.

Authorities will verify the quantity of sugar sold by individual mills to bulk buyers, whether directly or through dealers. Consumption levels will be assessed using Goods and Services Tax returns filed by sellers or purchasers under the relevant Harmonised System of Nomenclature code for sugar.

The latest measure follows an earlier direction limiting sugar stocks held by dealers to 30 days in an attempt to increase supplies in the market.

Prices have continued to climb despite the restrictions imposed on dealers. Government data showed that the average retail price of sugar reached Rs 52.30 per kg on 18 August, up 13 per cent from Rs 46.34 per kg a year earlier.

The increase has been substantially steeper in several markets. India Today reported that retail prices have touched around Rs 65 per kg in Punjab and moved towards Rs 58–63 per kg in parts of Mumbai, Bhopal and other cities. In Kolhapur, one of Maharashtra’s principal sugar-trading centres, wholesale prices have reportedly risen by nearly 20 per cent since the beginning of August to a record Rs 5,350 per 100 kg.

The price surge has also drawn attention to the growing diversion of sugarcane towards ethanol production under the Centre’s Ethanol Blended Petrol programme. India has been expanding ethanol output to reduce its dependence on imported crude oil and meet its E20 petrol-blending target, creating a policy challenge in balancing fuel security with food supplies and prices.

The country’s annual ethanol-production capacity had reached around 1,822 crore litres across 499 sites by mid-2025, according to the All-India Distillers’ Association. Sugarcane accounts for an estimated 30–35 per cent of the feedstock used for ethanol, while maize and rice make up the remainder.

Experts have cautioned that the ethanol programme must be managed carefully to prevent the diversion of sugarcane from disrupting domestic sugar availability and pushing up household prices.

With IANS inputs