Government allows sugar export on re-import basis.

In a move that will help sugar companies, the government has agreed for export of around 2-3 lakh tonne of the commodity that is presently stuck at various ports. However, sugar companies will have to import an equal amount of the sweetener within the next four months.


The reason behind large amount of sugar stuck at the ports is the sharp change in sugar prices and outlook over last two quarters. At the start of the current calendar year, sugar prices in India as well as international markets were ruling at record high levels. However, as the news of higher-than-expected production in India started coming into markets, sugar prices began to crash heavily.


Many sugar companies had imported duty-free raw sugar expecting higher prices and lower supplies domestically. However, with substantial upside surprise in local production and crashing of prices across the board, it became unviable to process the imported sugar.The industry has been requesting the government that since global prices were still higher compared to India and there was already over supply in local markets, they should be allowed to export the sweetener for now and the same can be imported at a later stage. Global prices are likely to move down in the next season on Brazil’s expected bumper crop this year.


While the government had been initially resisting the demand as it would be an unpopular decision to allow sugar exports at a time when domestic food-inflation is ruling in double-digits, it has now finally agreed for the move. However, sugar companies have been given only four months against their demand of 6-8 months for imports.