The government has decided to ask sugar mills to sell excess stocks above 37 per cent of total availability by September 30.

The food ministry will issue a notification this week announcing the stockholding limit for sugar mills, which will be valid until October 31, official sources said.

The measure will increase availability of sugar in the open market and keep prices under check during festival season when rates normally soar, the sources added.

Financial Chronicle reported the government’s plan to impose stockholding limit on sugar mills on August 25. However, the government has decided to tweak its initial plan of levying a uniform limit.

Now, the food ministry’s order will direct that “no producer of sugar shall hold any stock of sugar in excess of the quantities at the end of month” and then prescribe the limit as 37 per cent for September and 24 per cent for October.

While calculating the limit out of the total availability with each individual mill, the government has said that they should add the production in 2015-16 season (October-September) with the opening stock as on October 1, 2015. However, the quantity exported by mills will be deducted to calculate the to­tal availability, the sources said.

The food ministry has asked state governments to enforce the order by visiting each sugar mill to check the stock, the sources said.

The government also proposes to ban futures trading of sugar to check rising prices.

Finance minister Arun Jaitley had a meeting with food ministry officials on August 22 to discuss the proposed ban. Commodities markets regulator Sebi has been asked to decide whether a ban is required or not, sources said.

Currently, NCDEX is trading in four sugar contracts with October 2016, December 2016, March 2017 and December 2017 deliveries.

Last week, food minister Ram Vilas Paswan said that the government does not want sugar prices to rise further. So, in the interest of consumers, a ban on sugar futures trading has been recommended, he had said.

Stockholding limit on mills would be the fourth in a series of measures to control rising sugar prices that have failed to tame sentiments so far.

In April, the Centre empowered states to impose stockholding limit on dealers and traders for up to a maximum of 500 tonnes, after retail prices crossed Rs 40 a kg.

For West Bengal, the limit was set at 1,000 tonnes. Only UP, Maharashtra, Karnataka and Delhi have imposed the limit so far.

In May, the government withdrew export incentive to sugar mills, while it imposed an export duty of 20 per cent in June to divert supplies to the domestic market.