Concerned over rising sugar prices, the Ministry of Food has accused sugar mills of fueling speculative trends that drive up costs. In a letter sent by the Directorate of Sugar to all sugar mills across the country, the Ministry stated that certain mills are holding stocks exceeding their declared quantities. Furthermore, some mills are delaying supply even after selling the sugar, thereby encouraging speculation in sugar prices. Legal action will be taken against any sugar mill found to have discrepancies in their stock levels, in accordance with the Sugar Control Order, 2025, issued under the Essential Commodities Act.
Sugar prices in the country have witnessed a sharp rise over the past month and a half. Ex-factory prices surged from ₹4,200 per quintal in early July to over ₹4,800 per quintal by the second week of August. This has directly impacted retail prices, which have reached at ₹55 and ₹60 per kilogram. Concerned by this price hike, the government has initiated a drive for the physical verification of sugar mill stocks and has imposed a stock limit of 4,000 quintals on stockists.
The Ministry of Food sent this letter to all sugar mills on August 14, 2026; a copy is available with Rural Voice. The letter notes that recent physical verification of stocks revealed that some mills were holding quantities in excess of what they had declared. This indicates that these mills are not fully selling their allocated sugar quotas. Additionally, some mills are selling sugar early in the month but delaying dispatch until the end of the month. This practice creates an artificial shortage in the market, fuels speculative activities. To curb this trend, the Ministry has issued a directive via this letter requiring sugar mills to dispatch stocks to dealers, agents, or bulk buyers within seven days of the sale. Failure to comply will result in legal action under the Sugar Control Order, 2025. This directive remains in effect until November 30, 2026.
Additionally, the government has stated that officials from both central and state governments will continue to inspect sugar mill stocks, and legal action will be taken if any irregularities are found.
Meanwhile, given the low sugar stocks, sugar mills had recently proposed starting the crushing season early. In this context, they had made several demands, such as GST concessions. While the government has not yet accepted all these demands, the letter informs mills that sugar produced in October may be sold during October and November 2026.
Sugar production in the current crushing season (2025-26) has fallen significantly short of initial estimates. The industry had initially projected a production of 309 lakh tonnes (excluding ethanol diversion), but output reached only around 279 lakh tonnes, whereas the country's annual consumption is approximately 285 lakh tonnes. Production has consistently remained below domestic consumption levels over the past year and the current year. Based on earlier projections of higher output, the government had permitted the export of 15 lakh tonnes of sugar, a limit that was raised to 20 lakh tonnes in February 2026; however, actual exports are estimated to be around eight lakh tonnes. Due to the production shortfall and rising prices, the government banned sugar exports in May and subsequently imposed stock limits a few months later. Despite these measures, prices continue to rise. Industry sources estimate that the closing sugar stock for the current season—as of September 30, 2026—could range between 30 and 33 lakh tonnes, marking the lowest inventory level in decades. This explains why sugar mills are proposing an early start to production while the government is taking measures to control prices. A potential rise in sugar prices during the upcoming festive season could add to the government's concerns.