India’s One-Million-Tonne Raw Sugar Import Plan Faces Price Barrier

Domestic prices undercut imported sugar

India’s plan to bring 1 million tonnes of raw sugar into the domestic market is at risk after a sharp decline in local prices made imported supplies commercially unattractive. The government had approved the imports while rejecting speculation that the country faced a sugar shortage. However, firm international quotations and falling Indian prices have opened a gap that importers and refiners may struggle to absorb.

Jagran reported that ex-mill sugar prices in major producing states had fallen from about ₹65 per kilogram to a range of ₹44-₹50 per kilogram in recent weeks. The decline has weakened the economics of processing imported raw sugar and selling the resulting white sugar in India. For refiners, the central question is no longer whether the quota is available, but whether finished sugar can be sold without a loss.

Refiners commit only part of approved volume

According to industry-linked media sources cited by Jagran, port-based refineries have committed to importing about 260,000 tonnes of raw sugar. Only a few thousand tonnes have reached the domestic market so far. A large importer cited by The Economic Times said that sugar sold during the initial phase, together with cargo already at ports, would enter the market, but further volumes would be difficult to sell at competitive local prices.

Another importer estimated that white sugar produced from imported raw material costs more than ₹55 per kilogram before logistics expenses. By comparison, ex-mill prices had fallen to ₹45-₹46 per kilogram in Maharashtra and ₹48-₹50 per kilogram in Uttar Pradesh. Even before inland transport and distribution costs are added, imported material therefore carries a substantial disadvantage against locally produced sugar.

The price gap affects both trading companies and port-based refiners. Importers risk losses if they bring in sugar at firm international prices and sell into a weaker domestic market. Refiners, meanwhile, may delay purchases and processing while waiting for Indian quotations to recover. Unless domestic prices approach the cost of imported sugar, the approved quota alone is unlikely to generate the intended trade volume.

Government revises the import mechanism

The central government met sugar importers on Monday and urged them to increase purchases. Jagran said the application deadline for imported sugar under the Advance Authorisation scheme had been extended the previous week, while the mechanism was converted into a one-time tariff-rate quota. Under the revised arrangement, port-based refineries that normally import raw sugar, process it and export the finished product may sell sugar within the specified quota in the Indian market.

The change gives refiners access to domestic buyers, but it does not remove the price mismatch. Market participants indicated that sales become viable only when Indian sugar prices reach the cost of imported material. The government may therefore need to revise the program further if it wants arrivals to move closer to the 1-million-tonne target.

Short-term rise does not close the gap

Factory-level sugar prices have risen by 2%-3% since Monday. Industry participants linked the increase to supply-chain disruption caused by concerns about possible government action under the Essential Commodities Act and the prospect of inspections at retail outlets. Those concerns reportedly reduced market availability and produced a modest price recovery.

The increase remains insufficient to resolve the import economics described by traders. With imported refined sugar costing more than ₹55 per kilogram before logistics, quotations of ₹45-₹50 per kilogram in the principal producing states leave little room for commercial shipments. If that relationship persists, refiners are likely to wait, and India may import substantially less than the volume authorized by the government.