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The restrictions on sugar export from next month to rein in the run-away sugar prices and control rising inflation have weighed heavily on sugar company stocks, with most of them plunging 5-13 per cent on Wednesday.
Dalmia Bharat Sugar and Industries dipped 13.40 per cent, while Dwarikesh Sugar and Uttam Sugar Mills tumbled 9.38 per cent and 9.30 per cent. Balrampur Chini Mills and Avadh Sugar & Energy were down 8.56 per cent and 8.04 per cent, Shree Renuka Sugars and Mawana Sugars declined 6.69 per cent and 4.97 per cent.
In a notification, the Directorate General of Foreign Trade on Tuesday said export of sugar (raw, refined and white sugar) will be placed under restricted category from June 1.
Register export order
Following this, exporters have to register their export order with the Government before executing the actual shipment.
Raj Vyas, Portfolio Manager, Teji Mandi, said the Government move is a precautionary measure to safeguard the country's own food supplies and in any case exports were not expected to breach 10 million tonnes (mt).
The fact that the government is comfortable even at an inventory level of 6 mt by September-end is positive, he added.
As per the Indian Sugar Mills Association (ISMA), sugar export was expected to rise 25 per cent in the current sugar season (ending September) to 9 mt against 7 mt in the previous year.
Sugar mills have already contracted to export over 8.5 mt so far. Out of this, about 7.1 mt of sugar have been exported out of the country till April-end against 4.3 mt logged in the same period last year. Another 8 lakh to one million tonne of sugar is in the pipeline to be physically exported in May, according to ISMA.
Government’s U-turn on wheat
India is expected to produce 35 mt of sugar this season and consume 27 mt. Including last season’s inventory of about 8.2 mt, the surplus should be about 16 mt, including 10 mtfor exports.
Interestingly, the central government paid export incentive of ₹1,800 crore in subsidy to mills for exporting a mandated quantity of 6 mt in the sugar season ended September 2021.
After inviting buyers from various countries to sell wheat, the government earlier this month made a U-turn and banned exports to tame rising domestic prices.
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