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India is set to import around 1 million tonnes (mt) of raw sugar at nil duty after a gap of almost 10 years, as the government looks to cool domestic prices amid tightening supplies.

The move comes as the benchmark ex-mill sugar price in Maharashtra has climbed to Rs 5,400-5,560 per quintal. Prices have risen sharply since March 2026, just as the country enters the high-consumption festival period.

Sugar Supplies Tighten As Consumption Outpaces Production

The rise in prices has been largely attributed to depleted pipeline stocks with mills, as domestic consumption exceeded production during the 2025-26 sugar season, which began on October 1, 2025.

Some experts have also attributed the situation to the Centre's decision to allow sugar exports of 1.5-2.0 mt despite concerns over a potential domestic shortage based on what they described as “faulty” production estimates.

In November 2025, the Centre initially permitted exports of 1.5 mt of sugar, which was later increased to 2 mt. Of this, around 0.8 mt was shipped before exports were prohibited, according to industry estimates.

The quantity is almost the same as the amount of raw sugar India is now planning to allow mills to import.

“This clearly shows that someone somewhere was misleading the system into believing that the sugar fundamentals in the country were strong, while in reality production was not making up for consumption,” a senior industry executive said.

The executive said that even in February 2026, when the crushing season was already almost four to five months old, an additional export quota of 0.5 mt was permitted over and above the already allowed 1.5 mt.

“We have information that the crisis in supplies started from March itself, when mills were struggling to meet their monthly domestic sale quota. The alarm bells should have started ringing then when prices were inching upwards,” the executive further explained.

India Last Allowed Raw Sugar Imports In 2016-17

According to industry sources, India last permitted raw sugar imports during the 2016-17 season.

Some estimates put India's actual net sugar production in the 2025-26 season at around 27.9 mt, after accounting for 2.4 mt of ethanol. The opening stock for 2025-26 was close to 4.7 mt.

This put total availability at around 32.6 mt, while sugar consumption for the year is estimated at 28 mt, leaving a closing stock of around 4.7 mt.

However, once exports are included, and 0.8 mt is added to consumption, closing stocks fall to 3.5-3.9 mt, leaving the country facing a shortage.

“Ideally, India should have normative closing sugar stocks of 6 mt, which is three months’ consumption, but the current situation shows that it could have lower than required stock levels at the start of the 2026-27 season from October 1, 2026,” another official remarked.

That has necessitated the imports.

Government Looks To Boost Crushing, Tighten Stock Reporting

Government sources said the government is believed to have advised mills to advance their crushing to maintain sugar availability.

However, this may not be enough to bridge the supply gap, making imports necessary. The government has also tightened stock disclosure and reporting norms.

Will 1 Mt Of Imports Bring Prices Down?

A key question is whether the proposed import of 1 mt of sugar will lead to a significant decline in ex-mill and wholesale prices.

Sources said this may not happen, with prices potentially falling by around Rs 500 per quintal from current levels at best.

“For the mills it is not such an unhappy situation as even if prices come down by Rs 500 per quintal, they will still be more than the production cost of Rs 4,200-4,300 per quintal. This should help them clear sugarcane dues faster,” the executive said as per Business Standard's report.

India’s Import Plan Pushes Global Sugar Prices Higher

Meanwhile, raw sugar prices in New York, the benchmark index, rose to a 14-month high of close to 17.47 cents per pound a few days ago following news of India's planned imports after almost a decade.

“This translates into a landed price (FOB) of around Rs 3,840 per quintal at nil duty, which means that there should be considerable positive margin in importing,” the executive added.