Sugar price surge: Govt allows 1 million tonne duty free imports ahead of festive season

The government has allowed imports of up to 10 lakh tonnes of raw sugar at nil duty until October 31, 2026, in a move that could help contain domestic sugar prices ahead of the festive season.

The decision, notified by the Directorate General of Foreign Trade (DGFT), allows the import of raw sugar under a Tariff Rate Quota (TRQ) of 10 lakh tonnes at zero duty.

The move is notable as it opens the door to a sizeable quantity of imported sugar at a time when domestic prices have been rising. However, the country’s sugar industry has said the decision should not be interpreted as a response to any shortage.

The Indian Sugar & Bio-energy Manufacturers Association (ISMA) said the government’s decision sends a “clear signal” that speculative and unwarranted price increases will not be allowed to persist.

“There is no shortage of sugar in the country,” ISMA said, adding that stocks with mills are adequate to meet domestic demand until sugar from the new season arrives.

According to the industry body, the recent rise in sugar prices is not supported by market fundamentals and is instead a result of speculation and panic buying ahead of the festival season.

ISMA expects crushing in the new sugar season to begin 10-15 days earlier than usual, which would allow fresh domestic supplies to reach the market sooner.

The import window could therefore provide an additional cushion during the months when demand for sugar typically rises. ISMA described the measure as a “precautionary measure” that would provide further comfort during the peak festival period rather than a response to a supply gap.

The notification also provides a one-time mechanism for entities holding Advance Authorisations under SION E-52 to convert into the new TRQ scheme for quantities of raw sugar actually imported under those authorisations up to the date of the notification, subject to the conditions specified by the government.

The government’s decision could also be read as an attempt to pre-empt a sharper price escalation in the coming months. By signalling that additional supplies can enter the domestic market if required, the policy may discourage speculative stocking and panic buying without necessarily implying that India is facing an immediate shortage.

ISMA said the industry would cooperate with the government to ensure the expeditious import and processing of raw sugar, as well as the early commencement of crushing.

The association expressed confidence that the combination of additional import availability, early crushing and adequate existing stocks would help cool and stabilise sugar prices in the near term.