Sugar Policy Mismanagement Leaves India “More Sour than Sweet”, Pak has Ready Stocks at 30% Lower than India

· C. Rangarajan’s 2012 recommendation: The former C. Rangarajan Committee had recommended dismantling the 10% compulsory levy sugar system for ration shops and allowing sugar prices to be determined by market forces of demand and supply, providing greater freedom to sugar mills.

· Reform not implemented: The recommended market-oriented reform was never fully adopted. Government agencies continue to exercise extensive control over the sugar sector, including production, procurement from farmers and stock management.

· Extensive government controls: Sugar mills and traders are required to declare stocks online every week, while prescribed stock limits remain in place. Violations can attract penalties under the Essential Commodities Act, including criminal prosecution.

· Contradiction over rising prices: Despite these extensive monitoring requirements, the government has argued that it was unaware of developments contributing to the recent rise in sugar prices. This raises questions about the effectiveness of the existing regulatory system.

· Pakistan comparison: Sugar prices in Pakistan are reportedly around 30% lower than in India, despite broadly similar production conditions. The IMF is pushing Pakistan towards deregulation of its sugar sector.

· Pakistan eyes Indian market: Following India's temporary decision to allow duty-free raw-sugar imports, the Pakistan Sugar Mills Association (PSMA) has urged Islamabad to permit sugar exports directly to India. Pakistan's sugar mills reportedly see India as a nearby market that could help clear inventories and generate as much as $600 million in foreign exchange.

· Potential India–Pakistan trade logic: If political and security restrictions were overcome, cross-border sugar trade could potentially reduce transport costs, improve regional supply efficiency and benefit consumers on both sides.

· International prices argument questioned: The explanation that international sugar prices pushed up Indian prices is questioned because India's sugar imports and exports remain heavily controlled/restricted. With limited integration with the global market, domestic policy and supply management have a much stronger influence on prices.

· Delayed imports: The temporary decision to permit duty-free imports of raw sugar from Brazil may provide relief only after a considerable delay because the imported raw sugar needs to be refined before reaching consumers. This could allow importers/refiners to benefit from the prevailing price differential. Sugar crushing in India for new season will not start before November since the crop needs time to mature and reach high sucrose content.

· Wider commodity-management problem: Similar concerns are visible in onion markets, where prices have reportedly climbed to around ₹60 per kg, highlighting the recurring problem of government intervention failing to prevent sharp swings in essential commodity prices. It is alleged that 30% of Onions held in Government warehouses has rotted due to bad handling.

· Maize–ethanol trade-off: Increased use of maize for ethanol blending in petrol is also affecting the availability of maize for poultry feed. Higher feed costs are contributing to rising egg prices, illustrating how intervention in one commodity market can create shortages and inflation elsewhere.

Bottom line: The central argument is that excessive administrative control over sugar, onions and other agricultural commodities is producing the very shortages and price volatility that the controls are supposed to prevent. The piece advocates a return to market-based pricing, freer trade and less bureaucratic intervention—ending with a sarcastic reference to Mann Ki Baat for an explanation of what consumers should do.

[ABS News Service/27.08.2026]

Prof. C Rangarajan Eco Professor and former Governor of RBI recommended to the government to dismantle the 10 percent compulsory levy sugar for the ration shop, giving relief to the mills.

That was in 2012

The price of sugar was to be determined by market forces of demand and supply.

The reform was never adopted, the sugar directorate decides how much each mill will produce, what is it will give to the farmer.

The traders and mills have to declare stocks on line every week, there are fixed limits to stocks.

Jail is the penalty under the Essential Commodities Act.

The irony is that the government claims that it did not know what the mills were doing, hence the detection rising sugar price was late.

The joke is that the minister claims rise in international price affected the Indian price, when the fact is that both exports and imports are practically banned so India is indicated from the rest of the world!

Thus the second largest producer of sugar in the world is in the soup, more sour than sweet🤩

Pak sugar is 30 percent cheaper than India. Same conditions as India.

IMF is forcing Pak to deregulate the sector.

Eyeing the Indian Market: Following India's decision to temporarily allow duty-free raw sugar imports to stabilize its own domestic prices, the Pakistan Sugar Mills Association (PSMA) has actively urged the government to permit sugar exports directly to India. While political and security tensions keep the borders closed, millers are desperate to tap into this nearby market to clear inventory and secure up to $600 million in foreign exchange

Trading with them will save transport cost and create good neighbours!

(Tailpiece- the duty free imports from Brazil have another two months to refine the raw sugar. So the infusion of import into the Indian market will be very late, till then the Singapore based Wilmar will reap the windfall.)

Same story of market mismanagement of onions with price hitting 60 rupees

And ethyl alcohol made from maize for petrol blending is creating shortage of poultry feed. Egg prices are up.