The Central Government will replace the existing monthly sugar quota system with a fortnightly allocation mechanism from September 2026, as part of a series of measures aimed at curbing rising prices, preventing artificial shortages, and ensuring adequate availability in the domestic market.
Under the new system, sugar mills will be required to sell at least 40% of their allocated quantity during the first week, with the remaining quantity to be sold in the following week.
The Ministry of Consumer Affairs, Food and Public Distribution said the government had observed instances where sugar sold by mills at the beginning of a month was dispatched or lifted by buyers only towards the end of the month. Such delays contributed to artificial tightness in the market despite adequate sugar availability.
The new fortnightly allocation system will allow the government to monitor demand and supply more closely, respond faster to changing market conditions and release additional quantities whenever required.
Ex-Mill Sugar Prices Fall 20%
The government said ex-mill sugar prices have declined by around 20% in recent days, while retail prices have also started easing. The decline in retail prices is expected to become more visible as the reduction in ex-mill prices is transmitted through the supply chain.
However, sugar prices in wholesale and retail markets remain elevated despite the recent fall in ex-factory prices. According to the Department of Consumer Affairs, the all-India average retail price of sugar stood at around Rs 64 per kg on August 28, while the average wholesale price was Rs 5,935 per quintal.
The government has attributed the sharp spike in sugar prices in recent weeks primarily to hoarding and speculation, maintaining that the country has adequate sugar stocks.
Stock Verification
The Centre has also stepped up efforts to curb hoarding and black marketing by imposing stock-related restrictions on sugar dealers and bulk buyers. A nationwide physical verification of sugar stocks at mills found that, in several cases, mills were holding quantities higher than those declared in their monthly returns submitted to the government.
The verification exercise confirmed that there is no shortage of sugar in the country, according to the ministry, which urged consumers not to resort to panic buying or excessive stocking.
The government also found instances of short selling, where some mills sold less sugar than the quantity allocated to them under the monthly quota system. Such practices can unnecessarily restrict supplies in the market despite adequate physical stocks, the ministry said.
Mandatory Dispatch Within 7 Days
Sugar mills have already been directed to ensure that sugar sold is dispatched from the mill within seven days of the sale.
The government expects the combination of fortnightly quota allocation and mandatory dispatch within seven days to improve the movement of sugar through the supply chain, allowing faster delivery from mills to dealers and eventually to consumers.
The measures are also aimed at discouraging unnecessary stock accumulation and speculative holding. Bulk consumers have been advised not to maintain sugar stocks beyond their operational requirements.
New Sugar Season to Boost Supplies
Meanwhile, sugarcane crushing for the new sugar season is expected to begin from October 15. More than 10 lakh metric tonnes (LMT) of sugar is expected to be produced during October.
The government has also allowed sugar mills to sell sugar produced during October without restrictions, enabling new-season supplies to reach the domestic market at the earliest.
Sugar production is expected to rise to around 45 LMT in November, providing a significant boost to domestic availability. Operational mills in Karnataka and Maharashtra are also expected to add around 2 LMT of additional sugar during September.
In addition, refiners have been permitted to sell converted sugar brought under the Advance Authorisation Scheme, while dealers and bulk consumers holding excess stocks are also releasing sugar into the market.