The Centre is expected to allow an additional 1.2 million tonnes (MT) of sugar exports in the 2021-22 season, which will end in September, over and above the 10 MT already fixed, due to higher-than-anticipated domestic production.
Sources said a high-powered panel of officials approved the additional quota of exports during a meeting held a few days back.
“This extra quota will be good enough to absorb the surplus production and still leave around 6-6.8 MT of sugar as closing stocks, which is roughly three-four months of consumption,” a senior industry official said.
A formal announcement regarding this is expected soon, the official said.
Sugar production in the current year (2021-22) is now estimated to be over 36 MT, against the expectation of 35 MT.
Last month, the Nationalist Congress Party’s chief and former Union agriculture minister Sharad Pawar had written a letter to Prime Minister Narendra Modi asking for a relaxation of the cap on overseas shipments by 1 MT as production was expected to be higher than earlier estimates.
Meanwhile, in a related development, in a letter written to the government on Wednesday the Indian Sugar Mills Association (ISMA) demanded that the Centre allow the export of a minimum 8 MT of sugar under the open general licence regime in the next season (2022-23), which will begin in October, to absorb the surplus that will otherwise pressure domestic sugar prices.
According to ISMA estimates, India’s sugar production in the 2022-23 season (October to September) is expected to be around 39.97 MT, which will be around 0.6 MT more than the current year’s production of 39.4 MT.
“This is pure sugar production numbers, without factoring in sugar diversion for the purpose of ethanol blending,” ISMA said.
After factoring in around 3.4 MT of sugar diverted for ethanol blending in the current sugar season, the actual sugar available for consumption is expected to be around 36 MT, the body said.
It added that there will be more ethanol production in 2022-23, and hence more diversion, as the country aims for higher blending percentage keeping in mind the targets set by the Centre.
So, in 2022-23, diversion towards ethanol production will be around 4.5 MT, ISMA said. This will mean production of 35.49 MT, after accounting for diversion.
ISMA said the excess needs to be exported, else there will be a glut in the domestic market, leading to lower prices, and the sugar mills will be unable to recover their costs. They will ultimately be forced to default on cane payment to farmers, ISMA said.
It added that there is a need to expedite the decision on allowing exports next year as well because international sugar prices are falling and raw sugar prices, which were hovering around 19 cents per pound, have dropped to around 17.5 cents per pound.
“The industry feels that in case the government further delays announcing export policy for next year, the international sugar prices may weaken further, as a result of which the government may have to extend export support to the sugar mills to make exports remunerative for mills,” ISMA said in the letter.