A day after capping sugar export at 10 million tonnes (mt) for the current sugar season, the government on Wednesday said that unlike wheat where shipments were prohibited, the step in sugar is to monitor the movement of the sweetener out of the country so that there is no problem with regard to domestic availability.

The government on May 24 announced that sugar (raw, refined and white sugar) exports from June 1 would be allowed only through permits and fixed a maximum quantity of 10 mt for this season (October-September). The order, issued by the Directorate General of Foreign Trade (DGFT) late night, will be valid until October 31. However, sugar being exported to the EU and the US under CXL and tariff rate quota (TRQ) are exempt from the current restriction.

Sugar mills and exporters need to take approvals in the form of an export Release Order (RO) from Directorate of Sugar in the Ministry of Food and Public Distribution. While Mills need to dispatch sugar within 30 days of issuance of RO, exporters need to comply shipments within 90 days. The Food Ministry has asked all sugar mills to submit online information about dispatches for export to determine the quantity for issuance of ROs. In case of exports through Bulk or Break-Bulk vessels, if the shipping bill is filed and vessels have already berthed or arrived and anchored in Indian ports and their Rotation number has been allocated as on May 31, such vessel shall continue to proceed for the loading without any approval or RO, an official said. In sugar season 2021-22, about 8.2 mt of the sweetener has been dispatched from sugar mills for export out of which record 7.8 mt have been already shipped, so far whereas a record 9 mt has been contracted. The government expects that there is no problem of availability in domestic market as another 2.8 mt can go out of the country.

India had exported 7 mt of sugar in 2020-21 (October-September) as against 0.62 mt in 2017-18, 3.8 mt in 2018-19 and 5.96 mt in 2019-20. Briefing media on the necessity of putting the curb, Food Secretary Sudhanshu Pandey said: “Please take it out of mind that it is any kind of curb. The idea is to prevent undue spike and make prices stable, besides ensuring the requisite availability during festival. If there are no sugar left during October-November, what do you do?”

Highlighting that India has emerged this year as the world’s largest sugar producer, ahead of Brazil ans also the second biggest exporter, Pandey said the closing stock at end of this season would be 6.2 mt (after factoring 10 mt on export) which is enough to take care of demand in the lean period of October-December.

Crushing in new season starts in last week of October in Karnataka and by first week of November in Maharashtra whereas it is post-Diwali in Uttar Pradesh. Supply of sugar takes place from previous season for at least first two months of the new season. While ex-mill prices of sugar are ruling at Rs 32-33 per kg, the retail prices are hovering between Rs 33-44 per kg depending on the region, Pandey said.

“Any blanket ban on sugar exports by India would have raised world sugar prices and it would have also hurt India’s image as a reliable supplier of agro commodities. Since sugar and sugar products contribute 10 per cent to India’s agro export earnings, the move to regulate export is sensible,” said Vijay Kalantri, chairman of MVIRDC World Trade Center, Mumbai.

However, Mohit Nigam, Head, PMS, Hem Securities said: “In the midst of a worldwide price spiral in commodities, India’s export limits can drive international prices higher.”

The Centre’s decision may lower sugar prices which some mills fear that they will not be able to pay fair and remunerative price (FRP) to farmers. “Already the Maharashtra government is supporting mills to crush extra sugarcane by providing them grants. Now, we are not sure what sugar mills are going to do with huge stocks,” said one of the industry players. The mills in Maharashtra were looking for more export of sugar.

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