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Informist, Thursday, May 14, 2026

 

By Afra Abubacker

 

NEW DELHI – The Centre's decision to ban sugar exports may not have come entirely out of the blue for the industry, as applications to swap export quotas between mills were not being approved over the past month. This signalled that the government was growing uncomfortable with the domestic stock situation for next season, industry officials said.

 

Late Wednesday, the Centre banned exports of raw, white, and refined sugar with immediate effect till Sept. 30 or till further orders, aiming to ensure ample domestic supplies. Interestingly, the ban came within three months of the Centre announcing additional sugar export quotas. On Feb. 13, the government announced an extra export quota of 500,000 tonnes, over and above the earlier 1.5 million tonnes announced in November. However, the government had said the additional quotas would be distributed only to willing mills on a pro-rata basis with an undertaking to ship at least 70% of the assigned quota by Jun. 30, or bear penalties.

 

The quota conditions and short export window amid soft global sugar prices were unattractive to mills, and very few of them applied. As a result, only 87,587 tonnes or 18% of the additional quota was allocated among mills, and the remaining quantity lapsed.

 

Thus, mills were practically allowed to export only 1.59 million tonnes of sugar by September. As a result, the effective export quota granted for sugar mills was 1.59 million tonnes for 2025-26 (Oct-Sep).

 

Asked if the industry had expected the ban on sugar exports, industry officials said the government's delay in clearing export quota agreements between mills was definitely an indication of a shift in its export policy. "Swapping agreements are normally cleared within 7-10 days. But last month, these approvals were not given, and it was kept pending. So, that was giving some kind of an inkling that the government is a little worried about the stock situation," said Atul Chaturvedi, executive chairman of Shree Renuka Sugars.

 

Under the export quota swapping mechanism, mills located away from ports can exchange their export quotas for domestic quotas with mills logistically better placed to ship sugar overseas. Such agreements need the government's clearance, and these are typically granted within a week.

 

According MEIR Commodities' G.K Sood, such clearances didn't come through for more than a month. Sood estimates that around 250,000 tonnes of sugar exports were effectively stalled as the government was sitting on swap approvals. 

 

"The last tranche of swaps was kept pending. That was about 250,000 tonnes as of March-end," Sood said, adding that the government was effectively trying to retain sugar within the domestic market. "The government strategically denied swap applications by keeping it on pending for longer. And that should have alerted exporters, even if there was no direct indication (an export ban)," Sood said.

 

TIGHT BALANCE SHEET

According to industry experts, the 2025-26 sugar balance sheet is not as strong as previously expected. Sugar production is estimated at 27.8 million tonnes, significantly below the initial estimate of 30.9 million tonnes. With about 28 million tonnes of sugar production in the season and a carryover stock of 5 million tonnes, the total sugar availability for 2025-26 is 33 million tonnes.

 

India needs about 27.0-28.5 million tonnes of sugar to meet the annual consumption demand. So far, mills have already shipped out about 750,000 tonnes of sugar, against the 1.59 million tonnes of export quota.

 

"If 1.2 million tonnes of sugar exports had happened as expected, then the ending stock would have been around 3.5 million tonnes on Sept. 30," Sood said. The government prefers to have a minimum of 4.5-5.0 million tonnes as the closing stock to have a buffer against any short supply until the next season's sugar production gathers momentum.

 

According to Sood, the lower than expected sugar production was a prompt for the industry to brace for export policy changes. However, not everyone finds the stock situation tight or concerning.

 

"The current sugar season 2025–26 nevertheless remains broadly balanced, and the country is expected to maintain adequate closing stocks at the end of the season," Deepak Ballani, director general of the Indian Sugar Bio-energy Manufacturers Association, said in a note.

 

Shree Renuka Sugars' Chaturvedi also feels that current sugar production and consumption levels are broadly balanced. While industry bodies estimate sugar demand at 27 million tonnes, Sood said actual consumption is higher at around 28.0-28.5 million tonnes.

 

Chaturvedi and Ballani broadly feel that the export restriction was a pre-emptive measure, as there is no immediate reason to be alarmed over domestic availability. "In view of the evolving domestic supply scenario and climatic uncertainties for the upcoming season 2026-27, including concerns relating to rainfall distribution during the ongoing monsoon period, ISMA acknowledges that the government may have adopted a precautionary approach aimed at ensuring adequate domestic availability of sugar," Ballani said.

 

Though there are worries of lower rainfall amid the development of El Nino conditions, Chaturvedi cautioned against commenting on next year's crop outlook as it is premature at the current juncture. "Better would be to take a judgment sometime in August, not before that," he said.  End

 

Edited by Avishek Dutta

 

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