Indian sugar mills and refiners are anticipated to import only about 500,000 metric tonnes of the 1 million metric tonnes of raw sugar the government allowed duty-free. This is primarily because domestic ex-mill prices have fallen by nearly 20% from their record high, eroding the profitability of imports. The government had permitted these duty-free imports until October 31 to stabilize prices ahead of the festival season.
Initially, imports seemed attractive when prices were firm, but the subsequent sharp price drop has diminished their appeal for millers. The profit margin on imports is now thin, with uncertainty about its sustainability by the time shipments arrive in approximately two months. Most of the anticipated imports, around 300,000 tonnes, are expected to be undertaken by port-based refiners.
These refiners, who typically import raw sugar duty-free for refining and export, were recently allowed to sell their existing refined sugar stocks in the domestic market until the end of October. This policy change will enable them to quickly sell about 300,000 tonnes of their current holdings domestically. However, mills are largely uninterested in importing as domestic supplies are projected to increase from mid-October with the new crushing season, potentially further pressuring local prices. India has also urged mills to start sugarcane crushing by October 15 to boost supplies.
The government also revised the import rules, scrapping the uniform October 31 deadline for processing and selling imported sugar. Instead, importers now have a two-month window from the filing of the Bill of Entry to refine and sell each consignment in the domestic market. While this offers more flexibility, particularly for later shipments, the commercial incentive to import has weakened due to the 18% correction in ex-mill prices from a peak of ₹67 per kg to around ₹55 per kg. Industry estimates suggest that actual imports may struggle to reach the 500,000-tonne mark.
Additionally, the government has implemented a 15-day stock-holding limit for bulk sugar consumers (those using over 10 tonnes per month) from September 1 to November 30, 2026, to prevent hoarding and stabilize supplies. This measure is in response to retail prices remaining relatively high at ₹63 to ₹64 per kg, even as wholesale rates decline. Investors are advised to monitor shrinking refining margins, inventory levels, and upcoming policy decisions, especially concerning sugarcane diversion to ethanol, as these will impact the profitability of sugar companies.
