India’s sugar consumption has slowed down this month as restaurants, hotels, and large kitchens reduced cooking activity due to a shortage of LPG supplies. This has made it difficult for sugar mills to fully utilise the sales quotas set by the government.
With less than a week remaining in March, most mills have managed to sell only about 50–60% of their allocated monthly quota, according to Deepak Ballani.
India follows a regulated sugar system rather than a completely free market. Each month, the government assigns a fixed quantity of sugar that mills can sell domestically. This helps prevent excess supply, which could lead to a drop in prices and impact mill revenues, ultimately delaying payments to sugarcane farmers.
A similar approach is used for exports, though less frequently. When production exceeds domestic demand, the government announces export quotas to reduce surplus stock without disturbing local prices.
For March, mills were allowed to sell 2.25 million tonnes of sugar under the quota system. In comparison, they had fully utilised a quota of 2.3 million tonnes during the same period last year.
The recent LPG shortage, caused by supply disruptions linked to the West Asia conflict, has forced the government to prioritise gas supply for essential uses such as household cooking and fertiliser production. This has affected large-scale cooking operations in eateries.
As a result, demand for several food items has weakened over the past three weeks, especially from hotels, restaurants, and street food vendors—key drivers of demand for sugar, edible oil, flour, and poultry.
Additionally, March typically sees a seasonal drop in sugar demand following the peak consumption period from Diwali through Christmas, New Year, and the wedding season, noted Abhayraj Kohli.
