Centre may allow 8 million tonnes sugar exports next season in two tranches

With sugar production projected to be nearly 40 million tonnes (mt) in the 2022-23 sugar season (starting October 1), the central government may be looking at a policy to allow exports of around 8 mt of the sweetener in two tranches, informed trade and market sources.

In the first tranche, market sources said exports of around 5 mt could be permitted. This could be expanded by another 2.5-3 mt only after assessing the price situation and supply-demand scenario.

The sugar season runs from October through September.

If permitted, this will be lower than the 11.2 mt of sugar expected to be exported in the 2021-22 season, but will be good enough to maintain a healthy stock position of around 6-6.5 mt at the end of the season and also provide for diversion towards ethanol.

Whether exports will be permitted under open general licence — as is being demanded by the industry or under the prevailing quota system — isn’t as yet clear. A final call is being worked out.

“To start with, the government may seek the concurrence of mills for exporting sugar, based on their production capacity. Only when it is fairly satisfied with their viability, can it permit such exports,” said a senior industry official.

He said the primary concern of the government in breaking down exports for the following year in two tranches is to ensure

India has around 6 mt of sugar in its inventory and there is no unusual drawdown in inventory that could lead to a spike in prices later in the year.

“We have been told to enter into export deals up to 15 per cent of our estimated sugar production in the next season. This gives hope that a concrete policy is on the anvil. This will clear a lot of confusion,” said the official quoted earlier. 

India’s sugar production in the 2022-23 season is estimated to be around 40 mt without accounting for 4.5 mt diverted towards making ethanol. This would be almost 0.6 mt, or 1.52 per cent more the estimated production of the current season.

According to the Indian Sugar Mills Association (ISMA), the diversion of sugar for producing ethanol is estimated to be around 4.5 mt in the 2022-23 season, against 3.4 mt in the 2021-22 season.

After accounting for diversion towards ethanol, sugar production in the 2022-23 season is expected to be around 35.5 mt, while consumption is projected to be around 27.5 mt next season.

The surplus 8 mt needs to be exported, according to ISMA.

“The above estimate is made, assuming normal rainfall and other optimum conditions during the remaining period,” ISMA had said in a statement issued last month.

Meanwhile, to achieve an ethanol blending of 12 per cent in 2022-23, around 5.45 billion litres will be required which the industry is confident of supplying.