Sugar prices may ease after India allows duty-free raw sugar imports: Ind-Ra
India’s duty-free import of 1 million tonnes of raw sugar is expected to ease record-high prices and improve festive-season availability. However, Ind-Ra says relief may be temporary as low inventories, weather risks, stable cane acreage and rising procurement costs could continue supporting domestic sugar prices.
MUMBAI: Sugar prices in India are likely to fall from their record highs after the Centre allowed duty-free imports of 1 million tonnes of raw sugar, but the relief may be temporary as domestic inventories remain low and sugarcane acreage has changed little, India Ratings and Research (Ind-Ra) said, Deccan Herald reported.
The imports are expected to improve sugar availability ahead of the festive season and bring stocks closer to normal levels. However, Ind-Ra said the move is mainly a short-term measure to address tight supplies, while uncertainty remains over sugar production in the 2026-27 season.
“We expect domestic sugar prices to correct from recent record highs, but remain healthy, supported by tight inventory conditions and rising cane procurement costs,” said Khushbu Lakhotia, director, corporate ratings, Ind-Ra.
She said government decisions on the amount of sugarcane that can be used for ethanol production could also influence prices once the new crushing season begins in October.
The Centre on August 20 allowed duty-free imports of 1 million tonnes of raw sugar under a Tariff Rate Quota until October 31, 2026. The move is aimed at easing domestic supply shortages and marks India’s first duty-free sugar import for domestic consumption since the 2017-18 sugar season.
The government has also allowed a one-time shift of raw sugar imported under the Advance Authorisation Scheme up to August 20 into the duty-free quota system. A condition requires the refined sugar made from these imports to be sold in the domestic market by the end of October.
Raw sugar imports under the relevant category stood at around 0.4 million tonnes in the first quarter of 2026-27, according to Ind-Ra.
The rating agency expects the new imports to significantly improve availability during the festive season, when sugar consumption normally rises. Domestic sugar quota allocations averaged about 7 million tonnes during September-November over the past three to four years.
The 1 million tonnes of permitted imports could therefore increase market availability by around 15% during the period, Ind-Ra said.
However, the agency said the domestic sugar market remains tight because of low opening stocks, largely unchanged sugarcane acreage and weather-related risks to the 2026-27 crop.
Global sugar markets are also facing a tighter supply-demand balance. Changes in ethanol economics in Brazil and weather risks in major producing regions could keep international sugar prices firm.
Ind-Ra said the import decision should ease immediate supply concerns but would not remove the underlying pressure on domestic sugar availability. Tight supplies and higher sugarcane procurement costs are expected to continue supporting sugar prices and help limit the impact of higher cane costs on sugar companies’ profitability in FY27.
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Source : ChiniMandi
