Sugar stock limit raises concerns among food companies
India’s 15-day sugar stock limit for large industrial users has drawn opposition from food processors, who warn of production disruptions. Industry representatives argue that addressing sugarcane diversion to ethanol and tightening supplies would be more effective in controlling rising sugar prices.
The government’s decision to limit sugar stocks held by bulk industrial users to 15 days of consumption has drawn opposition from food processors, who say the move could disrupt production without addressing the main reason for the recent rise in sugar prices — the diversion of sugarcane towards ethanol production, Financial Express reported.
The government said on Thursday that bulk consumers using 10 tonnes or more of sugar a month can hold stocks equivalent to only 15 days of their requirements from September 1 to November 30. The measure is intended to increase sugar availability in the market and control prices.
Food companies generally keep at least a month’s supply of sugar, according to industry executives. They said cutting this to 15 days could create difficulties in maintaining regular production.
“This is not beneficial to food companies who require sugar for their products from syrups to juices, soft drinks to biscuits and other products. You need to keep adequate stocks for at least a month because cutting it to 15 days would leave manufacturers vulnerable to supply disruptions,” Raghav Jadli, president of the All India Food Processors’ Association, said.
The association represents food companies including Haldiram’s, Marico, ITC, PepsiCo and DFM Foods.
Shares of sugar companies rose sharply after the government announced the stock limit on Thursday. Balrampur Chini Mills and Bannari Amman Sugars gained 17.78% and 16.87%, respectively, on the BSE. Bajaj Hindusthan Sugar rose 14.96%, Shree Renuka Sugar gained 7.92%, while Triveni Engineering was up 3.53%.
The average retail price of sugar was Rs 54.06 a kg on Thursday, 17% higher than a year earlier and 13% above the level a month ago, according to the Department of Consumer Affairs’ price monitoring cell.
Jadli said the measure could affect both food companies and consumers by increasing the risk of supply disruptions and panic buying.
“Sugar is one of the key ingredients in the food industry. So, there will be an impact on production,” he said.
Enforcement concerns
A chief executive of a leading food company, who did not wish to be named, questioned whether the government has the infrastructure needed to enforce the new stock limit effectively.
“The notification is not practical from an implementation perspective because sugar stocks are held across dealers and warehouses, making it difficult to monitor at the ground level,” he said.
The executive said the government should instead focus on the diversion of sugarcane towards ethanol, which is reducing the amount of sugar available for food and other industrial uses.
The latest measure comes as the sugar industry expects lower opening stocks at the beginning of the 2026-27 season. The Indian Sugar & Bio-Energy Manufacturers Association (ISMA) expects opening stocks at around 3.5-4 million tonnes, compared with 5 million tonnes on October 1, 2025.
India consumes around 28 million tonnes of sugar annually. Industry sources have also raised concerns over lower cane yields after the early onset of flowering in key sugar-producing areas of Maharashtra and Karnataka.
The government had last month imposed stock limits on sugar dealers from August 1 to November 30 to prevent hoarding and speculative trading. The latest order extends the restrictions to large institutional and industrial consumers, including confectionery makers, soft drink companies, food processors and sweetmeat sellers.
Food industry representatives, however, said companies that use sugar for legitimate production should not be penalised by the new restrictions.
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Source : ChiniMandi
