Sugar mills must sell 40 percent of each fortnight's quota in the first week

From 1 September every licensed sugar mill in India will receive a sale quota twice a month instead of once. In each 15-day block the mill must sell at least 40 percent of that allocation in the first week and the rest in the second. Sugar that is sold must leave the factory gate within seven days. The Food Ministry announced the change on Friday.

The ministry said physical verification had found two problems that a monthly quota could not catch. Some mills held more stock than they had declared in monthly returns. Some sold less than their monthly allocation. In other cases sugar booked at the start of the month was lifted only at the end. That lag, the ministry said, produced tightness in the wholesale market even when the country was not short of sugar.

Retail prices have started to ease. Ex-mill rates fell by about 20 percent in the days before the announcement, according to the same statement. The government still treats the festive-season window as a risk. A separate order already limits bulk consumers who use more than 10 tonnes a month to 15 days of inventory between 1 September and 30 November. Confectioners, soft-drink plants and sweet shops sit inside that net. Government kitchens do not.

How the old system leaked

Under the monthly system a mill could book its entire quota early and let traders sit on the paper. The sugar stayed in the godown. Retail shelves tightened. The new calendar forces a first-week sale of 40 percent and a seven-day despatch clock. The ministry can also issue an extra fortnightly slug if a city runs short. That is the operational gain it claims: faster sight of the market and a shorter gap between a sale on paper and a bag on a truck.

On 24 August the ministry told mills not to sell to bulk traders who have not registered on the stock-limit portal. Only 5,045 dealers had registered by then. Unregistered buyers are now outside the legal channel. The combination of a shorter quota period, a first-week floor, a despatch deadline and a closed dealer list is meant to stop the same tonne being counted as sold while it still sits in a warehouse.

India has already opened a duty-free import window of up to one million tonnes until 31 October after a weaker production estimate. Export of raw, white and refined sugar remains prohibited until 30 September, with exceptions for EU and US quota sugar, advance authorisation and government-to-government cargo. The fortnightly sale rule is the domestic counterpart of those border controls.

What mills will feel

A mill that used the month to time sales against a rising price now has a clock. Selling 40 percent in seven days in a weak week means accepting a lower realisation. Holding back to the second week is legal only for the remaining 60 percent. The seven-day despatch rule also hits mills that sold to traders who delayed lifting. Those traders must now collect or lose the deal.

The ministry says there is no shortage. The verification exercise is the evidence it offers for that claim: undeclared stock existed. If the undeclared stock is real, faster release should show up in retail quotes within a fortnight. If the tightness was logistics rather than hoarding, the new calendar will only add paperwork. The first test is the first September fortnight, when mills have to put 40 percent of the new quota on the road in seven days.