India is set to extend its sugar export ban for a second year running amid concern that sugarcane production will be lower than expected, according to people with knowledge of the matter, reports The Economic Times.
Being the world’s largest consumer of sugar, India wants to manage domestic supplies after production drops for the first time in four years.
Aside from the export ban, the government is considering raising the price at which oil companies buy ethanol from sugar mills to build up supplies of biofuel. The plans, still being debated, have not been announced publicly, and officials familiar with them requested anonymity.
Its continued absence from the world market might further tighten supplies and push prices up in New York and London, two of the world’s largest sugar markets. This ban comes at a time when the largest producer of sugar, Brazil, is expected to see a drop in production following the drought conditions.
“With the current crop situation, there’s no room for sugar exports,” said a government source. “Our primary goal, after meeting local sugar demand, is to focus on ethanol blending, which requires more sugarcane.”
India is aiming to reduce carbon emissions by increasing the ethanol blend in gasoline to 20% by 2025-26, up from the current 13%-14%. Several Indian sugar mills, including E.I.D.-Parry, Balrampur Chini Mills, Shree Renuka, Bajaj Hindusthan, and Dwarikesh Sugar, have expanded their ethanol production capacity in recent years to support this goal.
The government is also considering a price hike of over 5% for ethanol procurement in the upcoming marketing season starting in November, according to sources. Last month, a government directive allowed sugar mills to use cane juice or syrup for ethanol production from November onward.
The decision to extend the sugar export ban and raise ethanol prices has not been officially reported yet but is expected to be announced later this month. A government spokesperson did not respond to requests for comment.
India, the world’s second-largest sugar producer after Brazil, imposed its first export ban in seven years at the start of the current season on October 1, 2023. During the previous season, New Delhi allowed mills to export only 6.1 million metric tons of sugar, almost half of the shipments made in 2021-22.
Sugar production for the 2024-25 season is expected to fall to 32 million metric tons, down from 34 million this year, due to uneven rainfall in key sugar-producing states like Maharashtra and Karnataka.
“The global market will need India’s sugar exports by 2025, especially with Brazil’s lower production. Without India’s supply, prices are likely to rise even further,” said a Mumbai-based trader with an international trade firm.
