India Prepares to Import Raw Sugar at Zero Duty After Nearly Ten Years
India is preparing to permit the import of approximately one million tonnes of raw sugar at zero duty to curb escalating domestic prices and bolster depleted reserves ahead of the high-demand festive period. The step comes after a hiatus of nearly ten years, marking the first raw sugar import initiative since the 2016–2017 season.
What Happened
Domestic sugar supplies have faced severe depletion during the 2025–2026 season, which began on October 1, 2025. This scarcity has pushed benchmark ex-mill rates in Maharashtra to ₹5,400–₹5,560 per quintal following continuous price surges that began in March 2026.
The domestic deficit stems from consumption surpassing production alongside earlier export clearances. In November 2025, authorities permitted 1.5 million tonnes in exports, later raising the ceiling to 2 million tonnes in February 2026 despite the crushing season being several months along. By the time shipments were stopped, an estimated 0.8 million tonnes had already been dispatched abroad.
According to industry estimates, net domestic production for the 2025–2026 period stands at approximately 27.9 million tonnes after accounting for 2.4 million tonnes diverted to ethanol manufacturing. Starting with an initial opening reserve of 4.7 million tonnes, total availability reached around 32.6 million tonnes. However, against a domestic consumption demand of 28 million tonnes and outbound shipments of 0.8 million tonnes, remaining closing stocks are projected to plummet to between 3.5 and 3.9 million tonnes.
Key Highlights
- India is set to allow duty-free imports of roughly 1 million tonnes of raw sugar for the first time since the 2016–2017 season.
- Benchmark ex-mill rates in Maharashtra have risen to ₹5,400–₹5,560 per quintal amid low mill reserves.
- Net domestic production is placed at 27.9 million tonnes after 2.4 million tonnes were diverted for ethanol production.
- Projected closing inventories of 3.5 to 3.9 million tonnes sit far below the standard three-month reserve target of 6 million tonnes.
- Global benchmark raw sugar prices in New York climbed to a 14-month peak near 17.47 cents per pound following the news.
- Domestic mills face production costs of ₹4,200–₹4,300 per quintal, leaving room to clear cane dues even if ex-mill prices drop by ₹500.
Why This Matters
The standard operating buffer for the country requires a closing inventory of roughly 6 million tonnes, representing three months of domestic consumption, before the next season begins on October 1. Current figures indicate that reserves will fall significantly below this safety benchmark.
Trade analysts indicate that the duty-free import of raw sugar offers a landed price of around ₹3,840 per quintal based on global benchmarks, ensuring viable commercial margins for importers. Market sources anticipate that the imports may lower domestic ex-mill rates by at most ₹500 per quintal. Because production costs stand between ₹4,200 and ₹4,300 per quintal, mills are projected to remain profitable and better positioned to settle payments owed to sugarcane farmers.
What to Watch Next
Government authorities have directed sugar mills to advance their upcoming crushing activities to supplement immediate market availability. Officials have also introduced stricter rules regarding stock reporting and disclosures to monitor supply movements. Observers will track whether mill crushing schedules can be brought forward effectively and how domestic retail and wholesale markets adjust as imported consignments arrive.
Frequently Asked Questions
When did India last permit raw sugar imports?
According to industry records, India previously permitted raw sugar imports during the 2016–2017 season.
Why did domestic sugar stocks drop?
Domestic reserves fell because domestic consumption outpaced production during the 2025–2026 season, combined with the export of about 0.8 million tonnes before outbound shipments were halted.
How much are sugar prices expected to decline?
Market sources estimate that ex-mill and wholesale prices may fall by up to ₹500 per quintal from their elevated levels once imported supplies enter the market.
Source: Based on reporting from Rediff.