India’s government plans to restrict sugar exports to manage domestic prices

INDIA— India, the world’s biggest producer of sugar and the second-largest exporter after Brazil, is planning to restrict sugar exports from 1 June to prevent a surge in domestic prices, as per ministry officials.

The official notification from the Directorate General of Foreign Trade (DGFT) stated that the export of sugar (raw, refined and white sugar) is placed under restricted category from June 1, 2022 onwards.

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According to the order, the export of the sugar will be allowed with specific permission of the Directorate of Sugar, Department of Food and Public Distribution and sellers have been asked to seek “specific permission” from authorities for any export of sugar between June 1 and October 31.

The government has decided to allow the export of sugar up to 100 LMT (lakh metric tonnes) to maintain the domestic availability and price stability during the sugar season 2021-22 (October-September), the notification stated.

The mandate to restrict exports comes at a time when annual retail inflation in Asia’s third largest economy hit 7.8%, its highest level in nearly eight years, in April.

The government says its concern is low stocks at the beginning of next season, which starts in October. A shortage of backup stocks during this time can push prices in the domestic market, according to a report by The Indian Express.

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It should be noted however that the country has had a bumper sugarcane crop and is set to produce 138 lakh tonnes of sugar, which is 30 per cent higher than the previous year, according to a report in The Times of India.

This speaks to the rising food protectionism around the world, as major producers curb agricultural exports, adding to the chokehold on global supply triggered by Russia’s invasion of Ukraine in February.

In the current marketing year, which runs from October 2021 to September 2022, Indian sugar mills have so far signed contracts for exports of about 9 million tons.

In the previous 12-month period, the country shipped 7 million tons of the sweetener overseas, which was the highest amount in recent years, according to government data.

The export restrictions are likely to have a significant impact on the global sugar market given India is a major producer and exporter. According to experts, it has the potential to impact prices worldwide.

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