India to scour new markets for its surplus sugar

Desperate to find international buyers for the rising stock of sugar in the country, India is planning to go on an aggressive marketing drive by sending trade delegations to potential markets to work out possible deals. Following Prime Minister Narendra Modi’s instructions to senior ministers earlier this month that export markets must be found for surplus sugar, the Commerce Ministry is preparing to explore opportunities in Malaysia, China, Bangladesh, Sri Lanka and Egypt.

“With the Indonesian sugar market taken over by cheaper exports from Brazil and Australia, we want to aggressively explore other possible markets for our sugar. Our trade delegations to identified countries would hold direct talks with importers and try to work out the best possible deal,” a Government official told BusinessLine .

Sugarcane farmers in the country are in distress as the millers owe them about ₹14,000 crore in arrears.

Sugar millers have asked the government to help them clear the arrears as they have taken a hit by the sharp dip in domestic sugar prices.

Ex-mill price of sugar in Uttar Pradesh is around ₹24/kg and roughly ₹22/kg in Maharashtra, against an estimated production cost of ₹30, as surplus stocks are expected to cross 10 million tonnes this season.

It is, however, not an easy task to export as international sugar prices are ruling much below domestic prices.

Lowering of freight costs is helping Brazil sell higher volumes of sugar to Indonesia, industry watchers say.

“Brazil is selling white crystal sugar in Indonesia at $290-295/tonne (FOB) while in India the total price of export works out to about $370. There is no comparison,” pointed out Kiran Wadhwana, Director, New Delhi-based broker Comdex India Ltd.

The government is open to export sugar through any means. “We want to export sugar under the barter system against import of agricultural commodities like edible oils,” Food Minister Ram Vilas Paswan had said at an industry event earlier this month. However, this is possible only with a handful of countries such as Indonesia and Malaysia.

The Commerce Ministry has already alerted Indian embassies in the identified markets to prepare for the visit of the trade delegations and identify possible importers, the official said.

The Food Ministry is also contemplating sops for white sugar to push exports. “Export contracts in June till early August were decent since domestic prices were down to ₹18-19/kg. It has now gone up to ₹22-23 which makes it unviable even with a weaker rupee,” an industry official said.

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