Central government put a temporary end to sales by mills for the next two months starting from 8th Feb18 resulting in a immediate hike in the Sugar price by Rs 1/kg to Rs 30.50/kg.
This put traders under worry that unless excess stocks are taken out of the country, there would be a bigger carry-over into the next season, when record output is likely.
Spot prices of M 30-grade sugar in New Delhi had tumbled by 6% between January 10 and 31. However, from past few days, price has recovered by more than 3%, responding to two policy decisions.
The Central government increased import duty on Sugar on Tuesday to 100% from 50% to stop the possibility of subsidised Sugar imports from Pakistan. This was followed by the cap on sales by mills for February and March in an effort to support prices.
In response to these decisions, buying interest was reported among consumers and bulk users. However, the temporary cap on Sugar sales is not the solution for the industry because excess Sugar will still remain in the country.