New Delhi: In a significant move aimed at maintaining stability in the domestic sugar market and ensuring consumers benefit from falling prices, the government on Friday doubled the existing sugar stockholding limit for bulk consumers from 15 days to 30 days.
The relaxation, however, comes with a condition: sugar stocks held beyond the existing 15-day limit must be sourced exclusively from sugar imported under the Advance Authorisation Scheme (AAS) and Tariff Rate Quota (TRQ).
The government has simultaneously called on sugar traders, wholesalers and retailers to immediately reduce retail prices and pass on the benefit of the sharp fall in ex-mill sugar prices to consumers.
Sugar Retail Prices Fall 10%, But Ex-Mill Prices Drop Nearly 25%
According to the government, retail sugar prices have declined by around 10 per cent, falling to Rs 58.50 per kg from a peak of Rs 65 in August.
However, ex-mill sugar prices have already declined by nearly 25 per cent.
The government observed that the slower decline in retail prices indicates that the benefit of lower ex-mill prices has not yet been fully transmitted through the supply chain to consumers.
It has therefore strongly appealed to the sugar trade to ensure that the reduction at the mill level is reflected in retail prices.
Bulk Consumers Can Now Hold 30 Days’ Stock
At present, bulk consumers using or consuming more than 10 MT of sugar per month as a raw material for production, consumption or use are permitted to hold stocks for a maximum of 15 days of their consumption.
Bulk consumers had requested an increase in the limit, particularly ahead of the upcoming festival season.
Under the government’s revised arrangement, they can now hold sugar stocks for up to 30 days, but the quantity beyond the existing 15-day limit must come exclusively from imported sugar under AAS and TRQ.
The stockholding limit for sugar purchased from the open market will remain unchanged at 15 days’ consumption.
The government said the measure is intended to provide greater operational flexibility to genuine industrial consumers during the festival season while ensuring that additional stock requirements do not put undue pressure on domestic sugar supplies.
Weekly Sugar Stock Disclosure Made Mandatory
The government has also introduced a mechanism requiring bulk consumers to declare and disclose their sugar stocks every Friday through the Department of Food and Public Distribution’s online portal.
The decision follows detailed consultations with major bulk consumers, with the government saying their suggestions were considered while framing the revised arrangement.
In a joint meeting with representatives of the Indian Sugar & Bio-energy Manufacturers Association (ISMA), the National Federation of Cooperative Sugar Factories and the sugar trade, the Secretary of the Department of Food and Public Distribution highlighted the gap between falling ex-mill prices and retail prices.
The Secretary said that farmers and consumers are the two central pillars of India’s sugar policy, adding that the government has consistently sought to balance the interests of sugarcane farmers with the need to maintain stable and reasonable sugar prices for consumers.