Mumbai: The Centre has approved the export of 1.5 million tonnes of sugar for the 2025-26 season, which began in October.
In tandem, the government has removed the 50 percent export duty that was levied on molasses — the by-product of sugar-cane processing.
These measures aim to support sugar-cane farmers and sugar mills facing elevated production and weaker diversion into ethanol.
Market reaction and stock movement
The announcement triggered a sharp rally in sugar-company stocks. Several shares rose by up to 10 percent in early trade, with the upper circuit hit by some. Key players such as Balrampur Chini Mills, Dwarikesh Sugar Industries, Dhampur Sugar Mills, Bajaj Hindusthan Sugar and Dalmia Bharat Sugar & Industries recorded gains in the 3-6 percent range. The relief on molasses export duty and the lifting of export restriction for sugar raised optimism around better realisations and improved liquidity.
Underlying rationale and industry context
India’s sugar production in 2025-26 is projected to be around 34 million tonnes, while domestic demand is estimated at about 28.5 million tonnes, indicating a sizeable surplus.
Meanwhile, the diversion of sugar to ethanol in the previous season fell short of targets, resulting in increased opening stocks for mills.
By allowing higher exports and removing duty on molasses, the government seeks to ease the burden of surplus, enable timely payments to cane farmers and improve the competitiveness of Indian sugar globally.
Industry response and outlook
While the 1.5 MT export quota is lower than the ~2 MT demanded by industry participants, it signals a positive step.
The removal of the molasses export duty is also significant: previously, the 50 percent duty had been imposed to preserve domestic supply for ethanol production.
With these tweaks, market watchers expect sugar mills to benefit from improved export prospects, while sugar-cane growers may see better timely payments and clearing of arrears. The rally in stocks reflects these improved fundamentals and growing investor confidence in the sector.
Disclaimer: This article is for informational purposes only and not investment advice. Market investments carry risks. Readers should conduct their own research or consult financial advisors before making decisions.
