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India may tighten sugar exports further

New Delhi: The Union government may tighten the ban on sugar exports as falling production raises further fears of a price hike induced by a shortage. In the beginning of 2022-23 sugar year (October-September), the government restricted sugar exports to 6 million tonnes, and so far, export contracts for 6.1 MT have been inked. The new plan involves restricting shipments of around 85,000 tonnes that are yet to leave Indian shores.

“About 6.02 million tonnes of sugar has already been dispatched, and the government may restrict sugar mills from exporting the remaining quantity of 80,000-85,000 tonnes,” a government official aware of the development said. “Though prices of the sweetener have stabilized, the government is being vigilant amid a drop in production.”

On 11 April, Mint reported ex-mill sugar prices had shot up 300 to 3,590-3,750 a quintal in Uttar Pradesh and 150-200 to 3,340-3,400 per quintal in Maharashtra within a span of three weeks and were seen firming up further.

At present, ex-mill sugar prices are being traded in the range of 3,590-3,670 a quintal in Uttar Pradesh and 3,370-3,410 per quintal in Maharashtra. The upswing in sugar price has subdued, but prices are running either up or down on a daily basis, as per spot market sources.

The Centre pegs India’s sugar production in the year ending September at 32.7 MT, compared with 35.9 MT in the previous year. Industry experts see sugar output 200,000 tonnes lower than the government’s estimates. The fall in sugar production has been attributed to a dip in Maharashtra and Karnataka output; however, there is a slight increase in Uttar Pradesh’s production. UP and Maharashtra are leading producers of sugar.

According to industry sources, sugar mills have so far exported about 5.9 MT of sugar, and the government is unlikely to announce additional sugar export quotas for this year as its priority is to ensure domestic availability amid the shrink in production.

“Availability of 27.5 MT sugar in local markets for domestic consumption is assured. Despite this, the government is closely monitoring the supply situation along with prices,” the officer said. “The sugar department has submitted the sought information to the authorities concerned, and the final call will be taken by them.” The other priorities of the government include diversion of sugar for ethanol and buffer stock, which is seen to be in comfortable position. The closing sugar stock in the 2022-23 sugar season is estimated to be 6MT.

In the 2022-23 fiscal year (April-March), India’s sugar exports were valued at $577.1 billion, a record-high, as against $460.3 billion in FY22. Sugar exports, in quantity terms, hit an all-time high of 11.2 MT during the 2021-22 (October-September) sugar year. With this, the country had pipped Brazil to become world’s largest producer and the second-largest exporter of sugar. Queries sent to the Ministries of Food and Public Distribution and Commerce remained unanswered till press time.

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