The Indian Sugar and Bio-Energy Manufacturers Association (ISMA) announced that sugar prices across India are likely to moderate in the coming days. The industry body attributes the recent sharp increase in retail prices not to a physical shortage, but to market sentiment driven by panic and speculative purchases.
No Actual Shortage, Says ISMA
Deepak Ballani, Director General of ISMA, stated that ex-mill prices have already begun to show signs of moderation, and this trend is expected to translate into lower retail prices. He emphasized that the country faces no actual shortage of sugar, despite government data showing an average all-India retail price of ₹63.05 per kg on August 24, a significant jump from ₹48.73 per kg just a month prior. This represents an approximate 29 percent increase.
Panic and Speculation Drove Price Surge
Ballani explained that the price hike over the past 20 days was primarily fueled by speculative buying and panic among traders and bulk consumers. A perception of potential supply tightness prompted these buyers to stock up prematurely, a perception ISMA believes was unfounded.
Comfortable Stock Levels
ISMA President Niraj Shirgaokar confirmed that India is projected to conclude the current sugar season with approximately 35 lakh tonnes of closing stock. He described this level as entirely comfortable for meeting domestic requirements.
Government and Industry Measures
In response to the market volatility, the government has taken steps to ensure stability. It has approved the duty-free import of 10 lakh tonnes (1 million tonnes) of raw sugar. This measure is intended to calm market sentiment and alleviate speculative pressures on prices, ensuring adequate domestic availability.
Proposed Stockholding Limit Reduction
ISMA has also advocated for a reduction in the stockholding limit for traders, proposing a decrease from 400 tonnes to 200 tonnes. Shirgaokar believes this move would encourage more sugar to enter the retail market, allowing consumers to experience price corrections, particularly ahead of the festive season.
Early Crushing Season Expected
Furthermore, ISMA anticipates that sugar mills will commence the new crushing season earlier than usual. This early start, combined with existing stocks and new domestic production, is expected to strengthen overall supplies and help normalize prices as festive demand approaches, according to ISMA Vice President Madhav B Shriram.