The Centre on Saturday permitted the export of six million tonnes (mt) of sugar which could be shipped by May 31, 2023. The Food Ministry has allowed the shipments by allocating export quota to mills.
It has allowed the export quota to be traded or exchangeable between mills, helping the government to ensure ample stocks are available in the domestic market. It will also allow sugar mills to improve their earnings from export and enable them to pay farmers on time their dues for cane supplies to the mills, officials said.
According to the notification, all sugar mills have been allocated a uniform 18.23 per cent of their last three operational years’ average production. The government expects the country’s sugar production to be about 36.5 mt, as estimated by the Indian Sugar Mills Association (ISMA) for current season (October 2022-September 2023).
Surrender option
The Food Ministry said sugar mills can either export the allotted quantity themselves or through exporters/refineries. Mills that do not want to export have to surrender their quota within the next 60 days. It asked the mills to ship out 90 per cent of the quota by May 31, failing which there will be a deduction in the domestic monthly release quota to the extent of 30 per cent of the unexported quantity.
Further, mills can exchange their allotted quantity with other mills within 60 days. For instance, if a mill in Punjab trades the quota with a mill in Maharashtra, the same quantity has to be sold by the Punjab mill in the domestic market and it will be adjusted with the regular monthly allocation of the Maharashtra factory.
In a notification issued on October 28, the Directorate-General of Foreign Trade said the restriction on sugar exports -- mandatory for exporters to have a prior permit from Food Ministry - will be in place until further orders or October 31, 2023, whichever is earlier.
Export curbs
Exports were restricted from June 1 to ensure the country had ample stocks for domestic consumption amid fear of a shortage during festival period and the decision helped curb any rise in retail prices of the commodity. The government initially capped shipments at 10 million tonnes (mt) for 2021-22 season (October-September), but later allowed additional shipments of 1.2 mt. It has now extended the time to complete these shipments (out additional 1.2 mt) until November 30.
The opening balance this season is estimated to have dropped to 5.5 mt as of October 1. According to the Indian Sugar Mills Association (ISMA), the apex body of private sugar mills, the total availability of sugar this season is likely to be at a record high of 41 mt, of which 4.5 mt could be diverted for ethanol production. This will leave the country with 36.5 mt of sugar, a tad higher than the last season.
The domestic consumption this season is likely to rise to a record 27.5 mt, leaving 8 mt for exports and carryover stocks of 6 mt as of September 30, 2023.
The sugar industry wants to take advantage of the absence of Brazil in the global sugar market until the end of March. According to industry experts, India can ship out at least 5 mt of sugar before April, once shipments are permitted.
Currently, global raw sugar prices have rebounded from a two-month low to 18.71 cents a pound (₹34,100 a tonne) for delivery in March after India delayed the announcement on resuming exports.