India caps sugar exports at 10 MT for first time in 6 years; all you need to know

India is the world's biggest sugar producer and the second biggest exporter behind Brazil

FPJ Web DeskUpdated: Wednesday, May 25, 2022, 12:22 PM IST
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Benchmark white sugar prices in London jumped more than 1% after India's decision. / Representational image | Photo credit: Suzy Hazelwood

The Centre on Wednesday said it has notified capping of sugar exports at 10 million tonnes in the current marketing year ending September to maintain the domestic availability and price stability.

The notification was issued by the Directorate of General of Foreign Trade (DGFT) late at night on May 24.

Sugar exports in the 2021-22 marketing year are "historically highest".

Sugar prices jump

Benchmark white sugar prices in London jumped more than 1 percent after India's decision.

India is the world's biggest sugar producer and the second biggest exporter behind Brazil.

Reuters in March reported that India was planning to curb sugar exports to keep a lid on local prices and ensure steady supplies in the domestic market.

Why has India capped sugar exports?

According to the Food Ministry, the decision came in the light of record exports of the sugar. Sugar exports in the 2021-22 marketing year are "historically highest". Exports in 2020-21 stood at 7 million tonnes and 5.96 million tonnes in 2019-20.

"Taking into consideration unprecedented growth in exports of sugar and the need to maintain sufficient stock of sugar in the country as well as to safeguard interests of the common citizens of the country by keeping prices of sugar under check, Government of India has decided to regulate sugar exports w.e.f. June 1, 2022," it said.

Sugar exports allowed till May 31

The ministry said sugar exports up to May 31 will be allowed.

For sugar export from June 1 to October 31, Export Release Orders will be issued to exporters on receiving application through a transparent method and these orders would be placed on a website of the Department of Food and Public Distribution, according to a letter written to exporters by the Food Ministry.

In the ongoing marketing year (October-September), contracts for export of about 9 million tonnes have been signed, about 8.2 million tonnes of sugar have been dispatched from sugar mills for export and approximately 7.8 million tonnes have been exported.

Sugar mills, exporters to take approvals for exports

Sugar mills and exporters need to take approvals in the form of Export Release Orders (EROs) from the Directorate of Sugar, Department of Food and Public Distribution, the ministry said in a statement. The decision will ensure that the closing stock of sugar at the end of September 2022 remains at 6-6.5 million tonnes, which is 2-3 month stocks required for domestic use.

"The government is worried about food inflation, and that's why it is trying to ensure that enough sugar remains in the country to cater to the festival season," said a Mumbai-based dealer with a global trading firm, to Reuters.

In a separate letter, the ministry has asked mills to submit online the details of the dispatch of sugar for export on a daily basis. In case of non-submission of these details, the applications for EROs may not be considered. Sugar mills have to apply for approval for dispatch of sugar for export/deemed exports, it said.

Non-implementation of ERO or non-export of sugar under ERO within LEO date will be viewed seriously and such exporters may be penalised under the Essential Commodities (EC) Act 1955 or the Sugar Control order 1966, it added.

“Any breach of the above conditions for export by an exporter, would invite blacklisting of the exporter and would disqualify them from further participation in OGL export besides inviting action under the EC Act and Sugar Control Order,” the ministry said.

Crushing in the new marketing year starts in the last week of October in Karnataka. For Maharashtra, it begins in the last week of October-November and in November in Uttar Pradesh. So generally, up to November, supply of sugar takes place from previous year stock, it added.

Govt to maintain stable prices of sugar in domestic market

The ministry mentioned that the government has been continuously monitoring the situation in the sugar sector, including production, consumption, export and price trends in wholesale and retail markets all over the country.

The government is committed to maintaining stable prices of sugar in the domestic market, and in the last 12 months, prices of sugar are under control, it said. Wholesale prices of sugar in India are range-bound between Rs 3,150 - Rs 3,500 per quintal, while retail prices are also within control in the range of Rs 36-44 in different parts of the country, it added.

Wholesale prices of sugar in India are range-bound between Rs 3,150 – Rs 3,500 per quintal, while retail prices are also within control in the range of Rs 36-44 in different parts of the country, it added.

(With inputs from Reuters, PTI)

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