India authorizes 1 million tonnes of duty-free raw sugar imports to curb prices

Import window targets record domestic prices

India has authorized duty-free imports of up to 1 million tonnes of raw sugar through October 31, temporarily removing a levy that normally stands at 100%. According to Livemint, the measure is intended to increase domestic supply and cool record prices ahead of the festival season, when consumption of sweets and processed foods typically rises.

The decision is unusual for the world’s second-largest sugar producer and largest consumer. India last imported sugar for domestic use almost a decade ago, Livemint reported. Ex-mill prices in Maharashtra, one of the country’s principal producing states, recently reached an all-time high. Jagran, citing Reuters, said lower production had contributed to an increase of about 40% in sugar prices over the previous two months.

Eligibility favors integrated refiners

Only companies with in-house refining capacity may use the duty-free quota. Mills and refiners can submit applications between August 21 and August 28. Port-based refiners that normally import raw sugar duty-free for processing and subsequent re-export under advance authorizations are also eligible to seek an allocation.

The government will additionally allow companies to divert some sugar previously imported under those processing arrangements into the Indian market after refining. All such processed sugar must be sold domestically by October 31. The rules therefore create a short, tightly controlled route for increasing availability rather than a broad liberalization of sugar imports.

India has also tightened inventory restrictions. Dealers and industrial users consuming more than 10 tonnes per month may hold no more than 15 days of consumption between September 1 and November 30, according to Jagran. The measure is aimed at limiting speculative accumulation and hoarding while the import quota and the next domestic harvest add supply.

Shares fall while world futures react

The policy reversal hit listed sugar producers after shares had rallied on expectations that tight supply and high prices would improve earnings. Jagran reported that Dalmia Bharat Sugar fell 5.47% to ₹480.30 on August 21. Dwarikesh Sugar Industries declined 4.32% to ₹52.99, Balrampur Chini Mills lost 4.15% to ₹735.25 and Triveni Engineering & Industries dropped 3.82% to ₹288.60.

The previous rally had been substantial: Balrampur Chini Mills had gained 18%, Dwarikesh almost 14%, and several other producers between 7% and 10%. The import authorization changed investors’ assumptions by introducing lower-cost foreign supply into a market where local mills had been benefiting from record prices.

International markets moved in the opposite direction. Livemint said New York raw sugar futures rose as much as 4.1% on Thursday to their highest level since April 2025. A purchase of up to 1 million tonnes by India could tighten export availability in the world market, although actual trade flows will depend on quota allocations, procurement decisions and the amount imported before the deadline.

Harvest and ethanol debate remain in focus

Below-normal monsoon rainfall has added uncertainty to sugarcane development. Producers plan to begin crushing the coming crop 10 to 15 days earlier than usual, rather than waiting for the customary early-November start, to reinforce domestic supplies. The Indian Sugar and Bio-energy Manufacturers Association has denied that the country faces an outright sugar shortage.

The policy has also revived debate over the use of sugarcane for ethanol. Arvind Kejriwal argued that diverting cane to ethanol had created the sugar deficit. The industry’s position and the government’s supply measures point to a broader allocation question: mills must balance sugar output, ethanol production and inventory needs while the authorities seek stable consumer prices. For global traders, India’s return as an importer adds demand during a limited window and could redirect raw sugar cargoes toward refiners able to meet the October 31 deadline.