Sugar Exports: Govt Planning To Impose Ban First Time In 7 Years, Says Report

The government is expected to ban mills from exporting sugar in the next season beginning October, halting shipments for the first time in seven years, as a lack of rain has cut cane yields, according to a Reuters report quoting three government sources.

The sugar export ban from India is likely to increase benchmark prices in New York and London that are already trading around multi-year highs, triggering fears of further inflation on global food markets.

“Our primary focus is to fulfil local sugar requirements and produce ethanol from surplus sugarcane,” said Reuters quoting a government source as saying. “For the upcoming season, we will not have enough sugar to allocate for export quotas.”

The government allowed mills to export only 6.1 million tonnes of sugar during the current season to September 30, after letting them sell a record 11.1 million tonnes last season. In 2016, India imposed a 20 per cent tax on sugar exports to curb overseas sales.

Monsoon rains in the top cane-growing districts of Maharashtra and Karnataka, which together account for more than half of India’s total sugar output, have been as much as 50 per cent below average so far this year, weather department data showed.

Patchy rains would cut sugar output in the 2023-24 season and even reduce planting for the 2024-25 season, an industry official, who declined to be named, said.

Local sugar prices jumped this week to their highest level in nearly two years, prompting the government to allow mills to sell an extra 200,000 tonnes in August.

“Food inflation is a concern. The recent increase in sugar prices eliminates any possibility of exports,” another government source told Reuters.

Retail inflation in India jumped to a 15-month high of 7.44 per cent in July and food inflation to 11.5 per cent, its highest in over three years.

India’s sugar production could fall 3.3 per cent to 31.7 million tonnes in the 2023-24 season.

“We’ve allowed mills to export large volumes of sugar during the past two years,” the third government source told Reuters. “But, we also have to ensure sufficient supplies and stable prices.”

Last month, the government also imposed a ban on non-basmati white rice exports. The central government also imposed a 40 per cent duty last week on exports of onions as it tries to calm food prices ahead of state elections later this year.