The Centre has decided to curb sugar exports for an indefinite period as per a Director-General of Foreign Trade (DGFT) notification. On Wednesday, the DGFT notified the sugar export policy which extended the restrictions that have been in place since October 2022. Though the policy allows exports with prior permission from the government, the Food Ministry is unlikely to issue any permit this year, except some quantities through diplomatic channels.

Restriction on export of sugar (Raw Sugar, White Sugar, Refined Sugar and Organic sugar) is extended beyond October 31, 2023, till further, the DGFT said, adding other conditions will remain unchanged. The notification has also clarified that export restriction will not be applicable to sugar being exported to the European Union and US under tariff rate quota (at concessional duty) as per prescribed procedure.

On Tuesday, businessline reported that there would be a continuation of the earlier policy except for two changes – no deadline for the restriction and organic sugar will also come under the purview.

Also read: Indian government unlikely to allow sugar exports till March 2024

El Nino threat

When sugar was put under restricted category from June 1, 2022, it was made clear that shipments may be allowed with permits issued by the Food Ministry, which will be continued in principle as per notification.

However, the Food Ministry is unlikely to issue any sugar export quota in the current season (October-September) considering tight supply situation in the domestic market, sources said. There is an expected drop in production, though it may be higher than estimated annual demand of 27.5-28 million tonnes (mt).

Also read: World stares at 2 million tonnes sugar deficit, says ISO

“The government will likely build higher domestic stock for 2024-25 season in view of potential threat from El Nino to sugarcane crop next year as the opening stock in current season is around 6 mt, which is just enough for domestic demand for October and November,” a source said.

Higher ethanol demand

Besides, there will be higher requirement of sugarcane for ethanol as the government has set a blending target of 15 per cent for 2023-24 ethanol year (November-October), up from 12 per cent target in 2022-23.

In a notification issued on October 28, 2022, the Directorate General of Foreign Trade said that the restriction on sugar exports – mandatory for exporters to have a prior permit from the Food Ministry – would be in place until further orders or October 31, 2023, whichever was earlier. For the 2022-23 sugar season, permits were issued for export of 6.2 mt.

Sugar mills in Maharashtra are expected to start crushing around Dussehra and in Uttar Pradesh factories may begin operation from last week of this month.

The Centre had earlier expected 5-5.5 mt of sugar diversion towards ethanol against 4.1 mt last season. But, considering the crop situation in Maharashtra and Karnataka, the diversion may not be that high, sources said. Sugar is not actually diverted to produce ethanol, which is made out of molasses or sugarcane juice/syrup or grains. The estimate is based on how much quantity of sugar could have been produced from the same quantity of sugarcane that gets diverted towards ethanol.

Though Indian Sugar Mills Association had on August 2 estimated sugar production for current season to drop to 31.68 mt (after diversion towards ethanol) from 32.8 mt in 2022-23 season.