Narendra Modi government has placed curbs on export of sugar, days after banning export of wheat, in a bid to control food inflation and to ensure availability of sugar in the domestic market. Sugar exports have been placed under ‘restricted’ category with effect from 1 June 2022, the Ministry of Commerce and Industry said, limiting sugar exports to 10 million tonnes till the end of the season on 31 October 2022. India is the second largest sugar exporter in the world.
Shooting inflation, which has remained above the Reserve Bank of India’s upper limit threshold for four straight months, has prompted the government to take stringent fiscal measures such as reduction in excise duties on petrol and diesel, and cut custom duties on raw materials plastic, steel and cement. Consumer inflation touched an eight year high of 7.79 per cent in April.
The government said sugar mills and traders who have specific permissions from the government will only be able to export sugar (including raw, refined and white sugar) till October 31 or until further orders. Additionally, the restriction is not applicable for exports to the European Union (EU) and the United States under CXL and TRQ (Tariff-Rate Quota) quota.
The step from the government is a “welcome” one and is taken “to ensure adequate domestic availability & stability in sugar prices across the country,” Piyush Goyal, the Minister of Commerce & Industry, and Consumer Affairs, Food & Public Distribution, said in a tweet Tuesday.
According to Bloomberg News, there were expectations for exports to range between 9 million and 11 million tons this season. “Some in the market were expecting as much as 11 million tons, so at least the news puts a cap on expectations,” Michael McDougall, managing director at Paragon Global Markets LLC told Bloomberg.
India is expected to produce 35 million tons this season and consume 27 million tons, Bloomberg News reported citing the Indian Sugar Mills Association. Including last season’s stockpiles of about 8.2 million tons, it has a surplus of 16 million, including as much as 10 million for exports, it added.
Earlier this month, the government took a U-turn from announcing to be the major wheat exporter of the world, and said it will ban exports of the commodity to tame rising domestic prices. The government also said wheat exports will be allowed on the basis of permission granted by the government to other countries to meet their food security needs and based on the request of their governments.