Sugar stocks fell sharply in early trade on August 21 after the government allowed duty-free imports of 10 lakh metric tonnes of raw sugar, with investors concerned that additional supplies could weigh on domestic prices and hurt mill margins.
Dalmia Bharat Sugar was among the biggest losers, falling 5.47% to Rs 480.30. Dwarikesh Sugar Industries dropped 4.32% to Rs 52.99, while Balrampur Chini Mills declined 4.15% to Rs 735.25.
Triveni Engineering & Industries fell 3.82% to Rs 288.60. Uttam Sugar Mills was down 3.07% at Rs 325.90, while EID Parry declined 2.22% to Rs 792.30.
Dhampur Sugar Mills slipped 1.99% to Rs 185.99, Avadh Sugar & Energy fell 1.53% to Rs 802.20, Bajaj Hindusthan Sugar declined 1.41% to Rs 23 and Shree Renuka Sugars was down 1.03% at Rs 25.86. Simbhaoli Sugars was unchanged at Rs 7.89.
Why did sugar stocks fall?
The immediate trigger was the government's decision to allow 10 lakh tonnes of raw sugar to be imported without duty under the Tariff Rate Quota (TRQ) system until October 31, 2026.
The Directorate General of Foreign Trade (DGFT) said in a notification, “The import policy for raw sugar is amended to allow 10 lakh MT of duty-free imports under Tariff Rate Quota (TRQ) till October 31, 2026."
The move is aimed at increasing domestic availability and containing the sharp rise in sugar prices. It is also the first duty-free raw sugar import decision in a decade.
For sugar mills, greater availability could put pressure on domestic sugar prices. Lower realisations could then affect the profitability of companies in the sector.
Sugar prices rise sharply
The government's decision comes after a steep increase in domestic sugar prices.
All-India average ex-mill sugar prices rose to around Rs 5,400-5,500 per quintal on Tuesday, compared with about Rs 3,900 per quintal a year earlier, according to industry data.
Retail sugar prices have also climbed. Consumer Affairs Ministry data showed the average retail price at Rs 52.30 per kg on August 18, up around 13% from Rs 46.34 per kg a year earlier.
Broader market remains steady
The selling in sugar stocks came despite limited movement in the broader market. At 9:17 am, the Sensex was up 25 points at 77,563, while the Nifty gained 12 points to 24,244.
The focus will now be on whether additional imports help ease sugar prices before the festive season and how the move affects sugar mills' realisations and margins.