Sugar stocks extend losses as Centre tightens stockholding limits for dealers

Sugar stocks remained under pressure on 2 September after the Centre reduced the stockholding limit for sugar dealers to 2,000 quintals from 4,000 quintals, triggering fresh selling across the sector, according to a Mint report.

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Shares of Balrampur Chini Mills, Dwarikesh Sugar Industries, Dalmia Bharat Sugar & Industries, Dhampur Sugar Mills, Avadh Sugar & Energy, Shree Renuka Sugars and EID Parry fell as investors reacted to the stricter inventory rules. According to Mint, Balrampur Chini and Dwarikesh Sugar had fallen around 8% over the previous two trading sessions, while Dalmia Bharat Sugar had declined about 7%.

Fresh losses on Wednesday

Selling continued during Wednesday's session.

Balrampur Chini Mills fell 4.5% to ₹638.60, Dalmia Bharat Sugar declined 3.6% to ₹451, and Dhampur Sugar Mills lost around 3% to ₹168.03, according to market prices cited by Mint. Avadh Sugar & Energy dropped more than 2% to ₹806, while Shree Renuka Sugars slipped 2% to ₹23.73. Dwarikesh Sugar Industries was down 1.7% at ₹48.31. Bajaj Hindusthan Sugar and EID Parry each declined about 1.6%.

Government halves stockholding limit

The Centre has directed sugar dealers not to hold more than 2,000 quintals of sugar at any time, down from the earlier cap of 4,000 quintals, according to the government notification cited by Mint. The revised limit will take effect from 15 September and remain in force until 30 November 2026.

The new rules also prohibit dealers from retaining sugar stocks for more than 30 days from the date of receipt.

Mint reported that the move is aimed at curbing hoarding, discouraging speculative trading and ensuring adequate domestic availability of sugar.

Measures to cool sugar prices

The latest restrictions come as the government steps up intervention in the sugar market amid rising prices ahead of the festive season.

The Centre had already imposed tighter inventory controls on large consumers in August and subsequently allowed duty-free imports of 1 million metric tonnes of raw sugar until 31 October 2026.

According to the reports, government data showed average retail sugar prices rose from ₹48.18 per kg on 20 July to ₹58.20 per kg on 21 August. Domestic sugar production for the current season is estimated at about 30.6 million tonnes, lower than the earlier estimate of 34.35 million tonnes.

The Commerce Ministry has attributed the rise in prices to lower-than-expected production, higher festive-season demand, weather-related damage to sugarcane crops and hoarding, according to Hindustan Times.

Kolkata exempted

The government has exempted Kolkata and its extended metropolitan region from the revised limit. The existing 4,000-quintal cap will continue in the region because it serves as a key distribution hub for eastern and northeastern India, according to Mint.

Sugar supplies reaching Kolkata largely originate from Uttar Pradesh and Maharashtra before being distributed across eastern markets.

Industry and market backdrop

India has also approved duty-free imports of 1 million metric tonnes of raw sugar for the first time in nearly a decade after a sharp rise in domestic prices, according to news reports.

The Indian Sugar Mills Association said sugar prices have risen more than 40% in the past two months, while the government continues to monitor inventories and availability ahead of the peak festival demand period.