Sugar production in India, the world's second largest producer, is estimated to decline to around 21 million tonnes in 2016-17 season ending September from 25 MT in the previous year. The annual demand is 24-25 MT.
Last month, the government had imposed the stock limit on sugar mills for the next two months to keep prices in check during the festive season.
By the end of September, a mill cannot keep more than 21% of its total sugar availability for the entire 2016-17 marketing year and a factory cannot hold more than 8 per cent at the end of October, according to the government notification issued last month.
Sugar is selling at an average price of Rs 42 per kg in the retail market, while branded sweetener is available at Rs 50 per kg.
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