Sugar Stocks Fall Up To 5% After India Allows 1 Million Tonnes Of Duty-Free Imports
· Free Press Journal
Sugar stocks came under heavy selling pressure in early trade on August 21 after the government announced duty-free imports of 1 million metric tonnes of raw sugar.
The move is aimed at increasing domestic availability and controlling sharply rising sugar prices ahead of the festival season.
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Dalmia Bharat Sugar led the decline, falling 5.47%, while Dwarikesh Sugar Industries dropped 4.32%. Balrampur Chini Mills declined 4.15% and Triveni Engineering & Industries slipped 3.82%. Uttam Sugar Mills, EID Parry, Dhampur Sugar Mills, Avadh Sugar & Energy, Bajaj Hindusthan Sugar and Shree Renuka Sugars also traded lower.
The weakness in sugar stocks came despite a largely steady broader market, with the Sensex and Nifty showing modest gains in early trade.
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The government has permitted duty-free imports of raw sugar until October 31. India generally imposes a 100% import duty on sugar, making the decision a significant policy intervention and the country's first major sugar import programme in almost a decade.
Domestic sugar prices have risen nearly 40% over the past two months, according to Reuters, amid concerns over lower production and tighter supplies. The import window has been timed ahead of the festival season, when demand for sweets and confectionery typically increases.
Port-based refineries that import raw sugar for processing and exports will be eligible to seek allocations under the quota. Refined sugar produced from raw sugar already imported by these refiners will also be permitted for domestic sale until October-end.
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The import decision could increase domestic supplies and moderate sugar prices, potentially reducing the benefit of higher realisations for producers. The government had also recently tightened inventory restrictions for large sugar consumers.
However, global prices moved higher following India's announcement. London white sugar futures and New York raw sugar futures gained as much as 4%, as traders viewed India's return to the international market as a major source of additional demand.
The policy announcement comes after sugar stocks had rallied strongly over the previous two sessions on expectations of higher producer realisations. Balrampur Chini Mills had surged 18% on Thursday, while Dwarikesh Sugar Industries gained nearly 14%.