The Indian sugar industry is facing a dip in production in the current 2022-23 season, with estimates projecting a drop from last year's 359 lakh tonnes (lt) to about 327 lt. To avoid any inflationary pressures in the lead-up to the upcoming Lok Sabha elections, the Indian government has recommended an immediate ban on the export of sugar. This move is expected to be implemented soon, and sources say the decision was made by a committee of ministers that included Finance Minister Nirmala Sitharaman and Commerce & Industry Minister Piyush Goyal.
There is enough sugar to meet domestic consumption demands, but the government is cautious, and sources say they don't want to take any risks ahead of the upcoming elections. The ban is expected to have an impact on market sentiment and will check any inflationary trends.
During the current season, mills have dispatched around 58 LT of sugar for export. In the 2021-22 season, exports hit an all-time high of 110 LT, valued at a record $5,770.64 million. However, the government has already capped exports at 61 LT for the current season.
The all-India average retail price of sugar is marginally higher than last year, with data from the Department of Consumer Affairs showing a price of Rs 42.24 per kg on Friday compared to Rs 41.31 in the previous year.
Overall, this move is expected to have a significant impact on the sugar industry in India, especially for producers who rely on exports. However, it remains to be seen whether the ban will have a lasting effect on the market, and how the industry will adapt to the changing circumstances.
