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Informist, Tuesday, Feb. 3, 2026

 

By Afra Abubacker

 

NEW DELHI – The sugar season that started October is notable for one thing: the Centre has been setting lower year-on-year monthly sales quotas for most months, signalling a cautious approach in supply despite a sharp rise in sugar output so far this season, market participants said.

 

After reducing the sales quota for October by 6% on year to 2.40 million tonnes and November by 9% on year to 2.20 million tonnes, the government kept the December sales quota unchanged on year at 2.20 million tonnes. In January, the quota was also set at 2.20 million tonnes, but down 2.2% on year, and the February quota was unchanged on year at 2.25 million tonnes, the sales quota data showed.

 

Mills are mandated to sell sugar in line with the monthly sales limit. The government fixes sales quota state-wise and mill-wise to regulate domestic availability, support prices, and help mills generate cash flows to clear sugarcane arrears to farmers.

 

Market participants expect the government to continue supporting prices through calibrated supply in the coming months as well, amid higher sugar output and slow sugar exports. Mills have contracted around 300,000 tonnes of sugar with domestic export houses so far, and actual shipments are much lower, said G.K. Sood, chairman of MEIR Commodities. The Centre has allowed mills to export 1 million tonnes of sugar by September end. 

 

In the past years, the Centre has avoided front-loading supply before March and has preferred to allocate higher quotas during Mar-May, when summer demand peaks and festival-related consumption increases, traders said. Instead of raising the minimum selling price of sugar, the government appears to be relying on lower sales quotas as a primary tool to support prices, said Harshveer Singh Soni, founder of research firm Greenleaf.

 

MEIR Commodities' Sood agreed. "The government has been trying to restrict supplies. The only objective is to support sugar prices and prevent them from collapsing." However, he noted that despite lower year-on-year sales quotas for most months and lower opening stock, sugar prices have not risen sharply, suggesting that actual market sales may be exceeding permitted sales quotas.

 

The ongoing 2025-26 season opened with 4.7 million tonnes of sugar stocks, sharply lower than 8.0 million tonnes last year. "With such a limited supply, sugar prices should have gone sharply up. But they did not." Sugar prices were depressed in December and early January due to peak crushing activity and weak winter demand. Prices of S-sugar in Maharashtra slipped to INR 3,780-INR 3,830 per 100 kg in early January from the INR 3,920-INR 3,960 per 100 kg in late November, according to data available with Informist.

 

However, prices recovered in recent weeks to INR 3,830-INR 3,900 levels as several mills are expected to wind up crushing operations in February and expectations of higher minimum selling prices also gained traction

 

This contrasts with January 2025, when sugar prices breached INR 4,000 per 100 kg levels in Maharashtra following the government's late sugar export announcement in January and supply concerns of lower sugar production last season. "All the talking heads came on channels and spoke about lower sugar production and relatively tight supplies, and prices rose," Sood said.

 

In the recent sessions, ex-mill sugar prices rose slightly, largely on market chatter around a possible hike in the minimum selling price. On Jan. 17, ChiniMandi, a trade media, reported that the government was likely to hike the minimum selling price of sugar to INR 37.5-INR 38.0 per kilogram, from the current INR 31 per kg, unchanged since February 2019.

 

While there has been no official confirmation, industry officials said the government appeared comfortable allowing sentiment-driven price increases in the market, rather than intervening directly. "Over the last two years, there has been repeated chatter about an MSP (minimum selling price) hike, but no decision has been taken," an official from the National Federation of Cooperative Sugar Factories said.

 

The Centre announces the minimum support price for several farm commodities and procures them at those prices. Although the minimum selling price for sugar is also announced by the government, it applies to market purchases, mandating buyers to purchase sugar at or above that level.

 

There is a growing scepticism around higher minimum selling price among industry experts. "Raising the MSP (minimum selling price) to INR 38 would still mean a near 23% increase, and anything close to industry demand (INR 41) would translate into an even sharper rise," Sood said. "I don't think any government can approve such price increases. It will be optics very difficult to handle," Sood said, adding that minimum selling price has become "a lost cause" after remaining unchanged for seven years. 

 

Nevertheless, the sugar industry bodies continue to urge the government to hike the minimum selling price, citing higher sugarcane prices. In addition, increased sugar production in the ongoing season is weighing on prices, according to market participants. India's sugar production is up over 18% on year to 19.50 million tonnes as of January end, supported by higher sugarcane availability, improved productivity, and smooth operations of mills, according to the Indian Sugar & Bio-Energy Manufacturers Association.  End

 

Edited by Akul Nishant Akhoury

 

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