Govt May Cut Or Scrap 100% Sugar Import Duty As Domestic Prices Hit Record High: Report
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Sugar prices in India have hit a record high amid a global supply crunch and weak monsoon rainfall, prompting the government to weigh cutting or scrapping the 100% import duty ahead of the festive season.
The government is considering lowering or scrapping its 100% import duty on sugar in a bid to ease domestic prices and boost local supplies ahead of the festive season, Bloomberg reported, citing people familiar with the matter.
Sugar prices in India, the world's second-largest producer of the commodity, have recently touched a record high. Officials believe lowering the import duty could help bolster domestic supplies through import shipments, according to the report. Discussions on the matter remain confidential and come ahead of the festive season, which typically drives a seasonal increase in sugar demand and prices. Spokespersons for the food and commerce ministries did not immediately respond to queries, the report added.
Why Is The Government Considering A Sugar Import Duty Cut?
The potential policy change comes amid broader concerns over global sugar supplies, with the El Niño weather phenomenon raising fears of disruptions to harvests. Similar concerns recently pushed New York sugar futures to their highest level in about a year.
The supply concerns are also being felt in India, where monsoon rainfall was 13% below normal, according to the India Meteorological Department (IMD). Sugarcane, which accounts for the bulk of India's sugar production, is dependent on rainfall. The rainfall
deficit had exceeded 40% near the end of June 2026, at the start of the annual rainy season, delaying sowing of some crops.
Ex-mill sugar prices in Maharashtra recently touched around Rs 46 per kg, an all-time high, according to data from the Indian Sugar and Bio-energy Manufacturers Association (ISMA). Sugar consumption in India typically peaks from late August through January as demand rises for traditional sweets, processed foods and beverages during the festive season.
Sugar Supply And Price Outlook
Global sugar prices have also risen, with raw sugar recently reaching a one-year high of 16.6 cents per pound, while white sugar touched its highest level in 15 months, according to a CNBCTV18 report. The gains have been driven by concerns over El Niño-related crop disruptions and a tightening supply-demand balance.
India is expected to produce about 27.9 million tonnes of sugar this season against estimated demand of roughly 28.5 million tonnes, adding to concerns over domestic availability as festive-season demand builds from August through November.
To shore up supplies, factories in Uttar Pradesh and Maharashtra, India's largest sugarcane-producing states, plan to advance the start of crushing operations by 10 to 15 days from the usual early-November timeline following consultations with the food ministry.
India typically does not import sugar for domestic consumption and last brought in substantial volumes in 2017-18, according to ISMA data. Sugarcane had been planted across 5.83 million hectares as of August 14, marginally lower than the corresponding period last year, according to the farm ministry.
The government has also taken steps to contain domestic sugar prices and ensure adequate availability. It imposed stock-holding limits on sugar dealers nationwide from August 1 to November 30, 2026, according to a Press Information Bureau release dated July 28.
The Ministry of Consumer Affairs, Food and Public Distribution said the measure was intended to curb hoarding, discourage speculative trading and ensure the continuous availability of sugar at reasonable prices. The ministry said the recent rise in ex-mill sugar prices was not supported by underlying demand-supply fundamentals and flagged hoarding, speculative transactions and paper trades without actual physical movement of sugar as factors contributing to an artificial perception of scarcity and avoidable price volatility.
Under the directive, sugar dealers are required to declare their stock positions and update them weekly through the Department of Food and Public Distribution's online portal. The department said it would continue to monitor the market and take necessary measures to ensure adequate sugar availability at reasonable prices.
Shares of sugar companies, including Balrampur Chini Mills, Triveni Engineering and Industries and Dhampur Sugar Mills, traded mixed on the NSE on Tuesday, August 18, following the Bloomberg report on the potential reduction or removal of the sugar import duty.
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Rochelle Britto is a business journalist with 8+ years of experience in financial journalism. She covers equity markets, corporate earnings, IPOs, commodities and the economy.
As a reporter with leading business publications, she has tracked financial markets and covered sectors including banking and financial services, retail, consumer goods, advertising and e-commerce.
Outside work, she enjoys travelling, discovering local cultures and spending time in nature.
