The Indian government is set to allow the resumption of sugar exports through permits from November 1 and as the first step to facilitate it, extended the volume cap on shipments until October 31, 2023.
Official sources said the Food Ministry will likely issue an order on the permits allotting mill-wise quota on Monday (October 31). At least 6 million tonnes (mt) of sugar will be allowed for exports to start with. The order, subject to clearance by authorities, will provide details on how export of sugar by each mill will be permitted.
In a notification issued late on Friday night, the Directorate-General of Foreign Trade said the restriction on sugar exports, which was initially imposed until October 31 capping shipments at 10 mt, will be in place until further orders or October 31, 2023 - whichever is earlier. The Government later allowed additional shipments of 1.2 mt. It has now extended the time to complete these shipments.
The notification is a mandatory requirement before the Centre can permit the export of sugar since it is restricting the quantity and allocating quotas for the shipment.
Industry sources said the notification is a precursor to permitting the resumption of exports which were restricted from June 1 to ensure the country had ample stocks for domestic consumption and rise in the retail price of the commodity was curbed.
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India exported a record 11.2 million tonnes (mt) of sugar in the 2021-22 season, which ended on September 30, resulting in domestic stocks declining to their lowest for the second time in a decade. Closing stocks are estimated to have dropped to 6.5 mt as of September 30.
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A meeting of the industry stakeholders held earlier this month arrived at a consensus to permit 7-8 mt of sugar exports. It also decided that the decision could be reviewed in February when a clear picture of production, exports and domestic consumption will be available.
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According to the Indian Sugar Mills Association (ISMA), the apex body of private sugar mills, the total availability of sugar this season will likely be a new high of 41.5 mt, of which 4.5 mt could be diverted for ethanol production. This will leave the country with 35.5 mt of sugar, a tad higher than last season.
Domestic consumption this season is likely to rise to a record 27.5 mt, leaving 8 mt for exports and carryover stocks of 6 mt on September 30, 2023.
The sugar industry is keen that exports should resume from November 1 so that it can take advantage of the absence of Brazil in the sugar market until the end of March. According to industry experts, India can ship out at least 5 mt of sugar the moment shipments are permitted.
The industry expects sugar exports to be permitted in two tranches, but no clear indications are available yet.
Currently, global sugar prices are ruling at a three-week low of 17.67 cents a pound (₹32,225 a tonne) for delivery in March on the hopes of supplies improving.