Centre will continue to prohibit sugar export in the current season (October-September) after an expected drop in production, higher requirement for ethanol, and to have an adequate quantity available in the domestic market as the top priority in an election year.

“The Director General of Foreign Trade will notify the sugar export policy this week as the validity of the previous notification expires on October 31,” an official source said. While there will be a continuation of the earlier policy, there are only two changes likely this time – there will be no deadline, and organic export will not be exempted from restriction, sources said.

Businessline was first to report in August about a possible export restriction on sugar during 2023-24 season.

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.

Exports were restricted from June 1, 2022, to ensure the country had ample stocks for domestic consumption amid fear of a shortage during the festival period and the decision helped curb any rise in retail prices of the commodity. The government initially capped shipments at 10 million tonnes (mt) for the 2021-22 season (October-September), but later allowed additional shipments of 1.2 mt. For the 2022-23 season, permits were issued for export of 6.2 mt.

“Though it is not a ban, it is the same meaning if permits are not issued for export. However, an early announcement will help mills plan how much sugarcane to be diverted to make sugar and how much for ethanol,” an industry expert said.

Sugar mills in Maharashtra are expected to start sugarcane crushing around Dussehra, and in Uttar Pradesh from the 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 due to a higher blending target of 15 per cent fixed for 2023-24, against 12 per cent in 2022-23. However, considering the crop situation in Maharashtra and Karnataka, the diversion may not be that high, sources said.

Actual sugar is not diverted to produce ethanol. Molasses or sugarcane juice/syrup or grains are used to make ethanol. 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 the Indian Sugar Mills Association had, on August 2, estimated sugar production for the current season to drop to 31.68 mt (after diversion towards ethanol) from 32.8 mt in the 2022-23 season, it decided to review the forecast after the monsoon rainfall in August was recorded at the lowest level since 1901. The sugarcane commissioners have informed the sugar output to be 29.5-30 mt.