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India has put the brakes on sugar exports

  • Published
    31st May, 2022
Context

India has produced over 350 lakh tonnes of sugar this year. Despite being the highest producer and second-largest exporter of sugar, the government has announced restrictions on its export. 

About

What are the restrictions?

  • India is the world’s largest producer of sugar and the second-largest exporter after Brazil.
  • Till the recent order, sugar was freely exportable under the existing Export Policy.
  • The Centre placed restrictions on the export of sugar while stating that exports will be allowed with the “specific permission” of the Directorate of Sugar and the Department of Food and Public Distribution.
  • The export of sugar — raw, refined and white — will be placed under the “restricted” category from June 1 till October 31.
  • The decision, the government said, was taken to maintain domestic availability and prevent a surge in prices amid rising global food and oil prices.
  • Citing the DGFT order, the government said in a statement that the season’s exports will be capped up to 100 lakh tonnes (LMT). 

Sugar export curbs are not applicable to the EU, America

  • Export restrictions on sugar will not apply to the European Union (EU) under the CXL quota and the U.S. under the TRQ (tariff-quota route)
  • TRQ is a quota for a volume of exports that enter the U.S. at relatively low tariffs.
  • A higher tariff applies on additional imports after this quota is reached.
  • India also has a quota arrangement for sugar export with the EU.
  • Traders can export sugar at relatively low or zero customs duty by availing of a CXL concession. 
  • For the current sugar marketing season, the Centre permitted the export of 10,475 tonnes of white sugar to the U.S. and 5,841 tonnes to the European Union.

Sugar production in India: 

  • In the ongoing sugar marketing year, sugar production in India saw an increase of 14 per cent to more than 340 lakh tonnes (till April).
  • The country is looking at a record produce of 355 lakh tonnes of sugar this season, according to the National Federation of Cooperative Sugar Factories Limited (NFCSFL).
  • India produced 311 lakh tonnes in 2020-21, 259 lakh tonnes in 2019-20 and 322 lakh tonnes in 2018-19.

Sugar exports from India: 

  • Like production, sugar exports have also broken records this year. According to the Centre, sugar exports have gone from 0.47 LMT to 100 LMT in the last five years, an increase by more than 200 times.
  • This season, Indian mills signed contracts for the export of 90 lakh tonnes of sugar.
  • While 82 LMT sugar has been dispatched from mills, 78 LMT has already been exported.
  • Last year, India exported 70 LMT of sugar against a target of 60 LMT.

Why are there curbs despite excess stock?

  • Spiralling prices of food and fuel pushed wholesale price-based inflation to a record high of 15.08 per cent in April.
  • The rise in the prices of mineral oils, crude petroleum & natural gas, food articles, non-food articles, and food products was responsible for the high inflation rate last month.
  • While there hasn’t been much impact on the retail prices of sugar, low production in Brazil this year suggests a possible shortage in the coming days. 
  • The Centre has maintained that it restricted sugar exports, although it did not impose a blanket ban, because it was not willing to take chances ahead of the festival season from October. 
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