India, Sept. 1 -- The central government has halved the stockholding limit for sugar dealers to 2,000 quintals from 4,000 quintals, tightening restrictions on the trade as it seeks to prevent hoarding and speculative buying ahead of the festive season.

The new limit will take effect from September 15 and remain in force until November 30, according to an order issued by the consumer affairs ministry on Tuesday. Dealers will also continue to be barred from holding sugar for more than 30 days from the date of receipt.

The 4,000-quintal limit, imposed August 1, was itself introduced after sugar prices began rising sharply.

The government has now reduced it further after physical verification of stocks across sugar mills, dealers and trade...