Restarting sugar imports, Indians feel 'bitter' in their hearts

Every year from August to November, India celebrates important festivals such as Ganesh, Oktoberfest, and Diwali, with a significant increase in consumption of candy, desserts, and other food items. But this year, before the peak holiday season arrives, sugar prices have already started to rise. The Indian Express reported on the 23rd that 'sugar has already become bitter'.

According to data from the Indian Ministry of Consumer Affairs, as of the 21st, the retail price of sugar in India, an essential ingredient in candies and chocolates, has risen to 65 rupees per kilogram (100 Indian rupees is approximately 7.0 RMB). On July 21st, the price was only 45 rupees per kilogram, an increase of 20 rupees in just one month.

Behind the rise in sugar prices is the decline in domestic production. The latest estimate from the Indian government is that India's sugar production during the 2025/2026 crushing season will be approximately 30.6 million tons, which is about 11% lower than the initial estimate of 34.3 million tons.

The Indian Express analyzed that excessive rainfall in Maharashtra, Karnataka, and Gujarat from September to October last year affected sugarcane growth. The accumulation of water in the fields combined with insufficient sunlight has resulted in a lack of sufficient air and light for sugarcane, which in turn affects the accumulation of sucrose in the stems, ultimately leading to a decrease in yield and impacting this year's sugar production and inventory.

This change has already been reflected in market prices. According to data from the National Commodity and Derivatives Exchange of India, spot sugar prices in major Indian markets rose to 5530 rupees per 100 kilograms on August 19th, reaching a new high in 16 years.

Faced with the dual pressure of the approaching peak holiday consumption season and lower than expected domestic production, the Indian government has recently taken continuous measures to increase market supply. On August 20th, the Indian government announced that it would allow tax-free imports of up to 1 million tons of raw sugar, valid until October 31st.

According to Bloomberg, India typically imposes tariffs of around 100% on imported sugar, marking the first large-scale duty-free import measure in nearly a decade. The cancellation of tariffs will help imported sugar enter the domestic market faster. At the same time, in order to prevent companies from hoarding, the government has also strengthened inventory restrictions.

The Times of India and other media reported that the government hopes to release more sugar into the market by increasing imports, restricting inventory, and other measures to avoid supply shortages during the holiday season.

But the Indian government's price stabilization measures unexpectedly brought new upward momentum to the international sugar market. According to Reuters, after India announced tax-free imports of 1 million tons of raw sugar, sugar futures prices in London and New York rose by about 4% at one point. Previously, India had not imported sugar on such a large scale in nearly a decade. Now that it has re entered the international market for procurement, it means that the global sugar market will usher in new demand growth, further exacerbating market concerns about tight supply.

Bloomberg analysis suggests that weather conditions in major sugar producing regions around the world may further push up sugar prices. At present, the El Ni ñ o phenomenon is threatening the harvest in Asia, and Brazil, the world's largest sugar exporting country, is experiencing unusually heavy rainfall, causing disruptions to sugarcane crushing operations.

Analysts believe that if India's import demand continues to increase and global supply continues to tighten, international sugar prices may face further upward pressure.