India weighs limited duty-free sugar imports to rein in record prices

India is contemplating limited duty-free sugar imports to combat record prices, according to multiple government sources. The measure could potentially allow for overseas shipments for the first time in nearly a decade, bolstering supplies and reducing prices during the festival season, from August to November. During this period, sugar consumption typically soars due to major festivals like Ganesh Chaturthi, Dussehra, and Diwali, leading to increased demand for traditional sweets and confectionery.

The government is exploring a range of measures, including lowering stockholdings, curbing imports, adjusting duties, and modifying monthly sugar allocations for domestic sales by mills. Wholesale sugar prices in Kolhapur, a major trading hub in Maharashtra, have surged nearly 20% since the start of August to a record 5,350 rupees ($56) per 100 kg, despite sufficient domestic supplies until next season's arrivals.

Ashok Jain, president of the Bombay Sugar Merchants Association, emphasized that local supplies are tight, and imports are necessary to boost supplies and lower prices during the festival season. India's sugar demand typically increases during August to November when festivals are celebrated, triggering higher consumption of sugar-based products.

Reuters had recently reported that India was considering restricting the amount of sugarcane used for ethanol production to boost sugar output and curb high prices. The government may request mills to import 1 million metric tons of sugar duty-free before October ends, as new-season supplies begin to arrive in November when cane crushing intensifies. Mills are expected to import raw sugar, as refined sugar prices are prohibitively high, with little margin for importing it.