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India may ban sugar exports to avert price hikes - BDTone24.com
June 26, 2022, 10:42 am

India may ban sugar exports to avert price hikes

Staff Reporter
  • Published: Tuesday, May 24, 2022,
India may ban sugar exports to avert price hikes

According to sources inside the government and the sugar sector, India intends to place restrictions on sugar exports for the first time in the last six years in order to avoid an increase in local prices. These restrictions might put a lid on this season’s exports at 8 million tonnes.

They indicated that an announcement may take place at the beginning of the next month.

As a result of the announcement, the share prices of sugar makers fell, with Dhampur Sugar Mills and Balrampur Chini each seeing a decline of 5% and Dwarikesh Sugar experiencing a decline of 6%.

“Sugar production is expected to reach an all-time high, but stockpiles are rapidly diminishing as a direct result of exports. During the holiday season, uncontrolled exports might result in a shortage of goods, which would drive up local prices “according to a high-ranking government official who requested anonymity but had knowledge of the situation and its details.

According to two of the three sources, the government is planning to set a limit of 8 million, and one official has said that the government is also looking into the possibility of imposing a tax on exports in order to discourage sales in other countries.

A request for comment that was sent to the Ministry of Commerce and Industry in India was not immediately met with a response.

A limit of 8 million tonnes for the marketing year that will conclude in September might lead to a de facto restriction on exports beginning in May, since dealers claim that mills have already committed to export 7 million tonnes.

They predict that mills might sign contracts for additional one million tonnes of exports in April based on arrangements made in March for about one million tonnes of sugar. This comes after global white sugar prices reached their highest level in five years on Thursday.

Reduced production from the leading producer Brazil as well as stable oil prices, both of which encourage mills to generate more sugarcane-based ethanol, have contributed to an increase in worldwide pricing. Restriction of exports by India, the world’s second-largest sugar exporter, is expected to cause prices to rise even higher.

In earlier estimations, it was predicted that local sugar stockpiles as of October 1 may fall to a five-year low of 6.8 million tonnes owing to record exports. However, given the jump in global sugar prices, such projections now appear optimistic.

According to a statement made by a representative of the business, “New Delhi is eager to start the new season with opening stock of 6 to 7 million tonnes, which is sufficient to meet December quarter demand.”

Weddings and religious celebrations such as Diwali and Dussehra are often responsible for the significant increase in demand that occurs during the December quarter.

Any restrictions on sugar exports would be the first since India imposed a 20% tax in 2016. This would represent a 180-degree turn for the Indian government, which up until the end of last year was providing subsidies for mills that were struggling to make cane payments to farmers due to record stockpiles.

However, due to record exports of more than 14 million tonnes over the last two years, New Delhi’s goals have shifted and they are now focused on producing enough sugar to fulfill the demand in their own country.

“The policy of the government is unambiguous. Produce enough sugar to meet the requirements of the local market while also producing as much ethanol as feasible from the excess sugar cane. Because of the instability of pricing on the worldwide market, you shouldn’t depend on exports “according to a policymaker who asked not to have their identity revealed.

A dealer located in Mumbai for a worldwide trading business stated that as a result of Russia’s invasion of Ukraine, prices of basic commodities such as edible oils and cereals have increased. As a result of this, the government is understandably worried about the rate of inflation in the cost of food.

The merchant said that in the past the government felt ashamed to import sugar at higher rates after setting records for the amount of sugar it exported, but he added that he did not believe the government would be reluctant to buy sugar today if it was really necessary to do so.

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