India Puts Restriction on Sugar Exports: How will it Impact Global Prices?

On Tuesday, the government placed restrictions on sugar exports to curb the domestic surge in prices. As per the reports, the government has advised traders to secure permission for overseas international sale of sugar from June 1 to October 31.

The decision has primarily been taken to improve availability of the commodity in domestic market, keeping a check on price rise. “Export of sugar (raw, refined and white sugar) will be placed under restricted category from June 1, 2022 onwards,” said the Directorate General of Foreign Trade (DGFT), in a notification.

According to the notification, the government will allow export of sugar up to 100 LMT (Lakh Metric Tonnes) with a view of maintaining domestic availability and price stability during the sugar season 2021-22 (October-September).

“As per DGFT order, the move will come into effect starting June 1, 2022 and will last till October, 2022 until further notification. The export of sugar will be allowed under special permission of the Directorate of Sugar Department of Food and Public Distribution, it added.

However, the restrictions will not be applied on the sugar exported to the European Union (EU) and the US under CXL and TRQ. In India, the decision of halting sugar exports has been taken for the first time in six years. As per Reuter’s report, India may cap this season’s export at 10 million tonnes.

At present, India is the largest sugar producer globally and the second largest exporter after Brazil. The move by India, as per the economists, has the potential to impact global prices of the commodity.

Similar steps has been taken by other governments in wake of the Russia-Ukraine war that has led to the surge in food prices in many parts of the world.

A few nation have put quotas on grain shipment From June 1, Malaysia will halt exports of 3.6 million chicken. Indonesia, on the other hand, has banned the export of palm oil recently. Last week, India banned wheat export amidst rising inflation.