After veggies, is Sugar going to be the next inflationary pain?

In response to recent reports suggesting an impending sugar export ban by the government, the Indian Sugar Mill Association (ISMA) has swiftly refuted these claims, terming them as premature assumptions. This clarification arrives on the heels of news agency Reuters, citing undisclosed government sources, reporting the potential ban on sugar exports from October onwards.

Amidst an ongoing surge in inflationary pressure, India has witnessed a notable escalation in the prices of essential food commodities such as rice, tomatoes, and onions in recent weeks. In a bid to prioritize domestic consumers, the country took the step of prohibiting the export of non-basmati white rice this past July. Additionally, a 40 per cent export duty was recently imposed on onions, aimed at curbing their export and stabilizing domestic prices.

Of global significance, India's sugar production plays a pivotal role in meeting a substantial portion of the world's sugar requirements. Any halt in its export could have ramifications on benchmark prices in global trade hubs like New York and London, which are already experiencing multi-year highs. Such developments could potentially exacerbate concerns about inflation within the global food market.


As of now, India has allowed sugar mills to export a limited quota of 6.1 million tonnes of sugar during the current season, extending up to September 30. This is in contrast to the record-breaking 11.1 million tonnes exported during the previous season. The looming crisis can be attributed to erratic monsoons and inadequate rainfall in key crop-producing regions, particularly Maharashtra and Karnataka.

The estimated sugar production for the year stood at 330 lakh tonnes; however, this projection is subject to revision due to the adverse weather conditions. With a carryover stock of 65 lakh tonnes within the country, the demand remains at 275 lakh tonnes, with an additional 50 lakh tonnes earmarked for ethanol production.

Contrary to assumptions, India's status as a sugar exporter is not a regular occurrence. In the past two years, owing to a global sugar shortage, India exported 60 lakh tonnes of sugar. If the speculated ban on sugar exports materializes from the upcoming October season, it would mark the first time in seven years that such shipments come to a halt. Back in 2016, India implemented a 20% tax on sugar exports as a measure to curtail overseas sales.