Sugar prices: Centre lets mills sell October output beyond quota before Diwali

Sugar prices have risen sharply in the run-up to Diwali, and the Centre has responded by loosening the rules on how much sugar mills may sell. On October 16, 2026, the Union food ministry said mills may sell the sugar they produce in October either in October or in November, and that this would be over and above the quantities already allowed under the regular monthly release quotas. The step follows an order on October 13 that allotted 1.4 million tonnes of sugar for domestic sale between October 13 and October 31, after ex-mill prices climbed by close to Rs 1,000 a quintal in about ten days.

India's sugar year runs from October to September, and October is the awkward month in between. Last season's stocks are running down, while this season's cane crushing has barely started. Maharashtra issued crushing licences to 210 mills with crushing allowed from October 15, but trade reports say a shortage of harvest-ready cane has slowed early starts in Maharashtra and Karnataka, and that large-scale crushing may not begin until November. That gap falls exactly when demand peaks: Dussehra, Diwali and the wedding season all push up buying by sweet makers, bakeries and households.

The government controls how much sugar mills may release each month through a quota system, which is meant to keep supply smooth through the year. When prices jump, the quota is the first lever it pulls. This time the ministry went a step further by letting mills sell fresh October production on top of the quota, so that any sugar the new season produces early can reach the market at once instead of waiting for November's allotment.

The measures also show how the Centre is working on both ends of the supply chain. On the mill side it is releasing more sugar. On the trade side it has cut dealer stock limits in steps, from 4,000 quintals in August to 2,000 quintals in mid-September and 1,000 quintals from October 15, to stop sugar being held back in warehouses ahead of the festival rush.

Short-term: More sugar should be available for the Diwali week, which may slow or halt the rise in wholesale prices. Trade reports are cautious, however: one industry executive said only limited consignments had reached the market because buyers and mills were not agreeing on price, and with little fresh cane being crushed, the extra freedom to sell October output may add only modest volumes at first.

Long-term: The bigger test comes in November, when crushing should be in full swing across Uttar Pradesh, Maharashtra and Karnataka. If the new crop arrives on time, prices should ease naturally. If cane is short or late again, the government may have to consider more steps; it has not said what it will do for November beyond the measures already announced.

Who is affected: Households buying sugar and sweets for the festival; halwais and small sweet makers, such as Agra's petha makers, who have complained of costly sugar; sugar mills and their cane farmers, whose cash flow depends on sales; and wholesale dealers, who now face tight limits on how much they can stock.

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