India changes rule for sugar stock amid bitter prices

In a bid to combat soaring sugar prices, the Indian government has decided to enforce a new rule for bulk sugar traders. The revised regulation, set to take effect on September 1 and remain in place until November 30, mandates that dealers purchasing more than 10 metric tons of sugar per month cannot retain inventories for longer than 15 days. This measure, announced on Wednesday, aims to alleviate the unprecedented price surge that has gripped the country.

The government's decision comes in the wake of recent reports suggesting that India is contemplating further steps to ensure a steady supply of sugar and curb its record-high prices. These potential measures include imposing limitations on duty-free imports and tightening stockholding restrictions for large-scale traders, which could potentially pave the way for foreign shipments for the first time in nearly a decade.

Sugar consumption is anticipated to surge during the crucial period of August to November, as various Indian festivals such as Ganesh Chaturthi, Dussehra, and Diwali take place. This cultural phenomenon typically prompts major biscuit and confectionery manufacturers to stockpile sugar in anticipation of the festive season. However, the recent surge in sugar prices, which have increased by 10% over the past month and are projected to persist for at least three more months, has raised concerns among stakeholders.

The escalating sugar prices have been attributed to a combination of factors, including tight supplies and heightened demand driven by the upcoming festivals. Additionally, adverse weather conditions, such as sporadic rain and dry spells, have adversely affected the sugarcane crop, which is highly dependent on irrigation for its cultivation.

As the government seeks to strike a balance between meeting the rising demand for sugar and curbing its price hike, the new rule for bulk traders is expected to play a significant role in stabilizing the market.