Domestic sugar demand outpaced monthly quotas in 2025-26, say industry sources
India’s lower monthly sugar sales quotas failed to match rising consumption in 2025-26, tightening supplies and raising prices. Mills dispatched 191.5 lakh tonnes against 178.5 lakh tonnes allocated through May. Despite duty-free imports, wholesale prices continued rising, while closing stocks are estimated at 36 lakh tonnes.
India’s lower monthly sugar quota for domestic sales did not keep pace with consumption during the 2025-26 season, contributing to tighter market availability and higher prices, industry sources said, The Hindu Businessline reported.
Retail sugar prices had risen to Rs 47 per kg in May, with speculation also being cited as a factor. However, industry sources said restricted monthly releases played a direct role in limiting supplies. Between October 2025 and May 2026, mills were allocated 178.5 lakh tonnes (lt) for domestic sales, while actual dispatches reached 191.5 lt, 7 per cent above the permitted quantity.
The Food Ministry, which regulates the sugar sector and allocates monthly sales quotas to mills, has approved 245.5 lt for domestic sale until August. If the September allocation is maintained at the year-ago level of 23.5 lt, total domestic sales allocation for 2025-26 will reach 269 lt, 2.4 per cent below the 275.5 lt allocated in 2024-25.
Industry sources said monthly quotas consistently remained at or below year-ago levels even as consumer demand increased. As the season draws to a close, they said, actual inventory availability is becoming more important than earlier official estimates.
Based on the higher dispatches, domestic sugar consumption during 2025-26 could be in the range of 288-290 lt, sources said. Experts, however, have described the tighter releases as a cautious strategy to maintain stock balance, even though some mills have exceeded their allotted quotas.
The government was aware of higher-than-allotted sales during the season, industry sources said, adding that this was reflected in monthly release orders, which recorded penalties against some mills for violating rules under the Sugar Control Order.
The recent decision to allow raw sugar imported duty-free under the Advance Authorisation Scheme (ALS) for re-export to be sold in the domestic market could make 3-5 lt available immediately, an industry source said. However, refiners may release the quantity in stages because a large supply entering the market at once could cause prices to fall sharply.
Meanwhile, wholesale prices have continued to rise despite the expectation of lower ex-mill rates following the duty-free import decision. According to Consumer Affairs Ministry data, the all India average wholesale sugar price increased to Rs 6,036 per quintal on August 26 from Rs 4,593.62 per quintal on August 1.
The average wholesale price stood at Rs 5,923.88 per quintal on August 25, Rs 5,829.94 on August 24, Rs 5,866.67 on August 23, Rs 5,617.53 on August 22, Rs 5,381.39 on August 21, Rs 5,153.72 on August 20 and Rs 5,004.59 on August 19. Retail prices have also remained elevated, prompting some states to consider subsidised sales.
A senior trader said the government should have responded when sugar production began declining in January rather than waiting until the end of the season. The trader said bullish sentiment could persist until imported sugar physically reaches the domestic market.
The Indian Sugar & Bio-Energy Manufacturers Association (ISMA) estimates domestic consumption at 285 lt and production at 279 lt in 2025-26, excluding around 30 lt diverted towards ethanol. Closing stock as of September 30 is estimated at nearly 36 lt, compared with close to 80 lt on July 31.
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Source : ChiniMandi
