'Govt's move to hike sugar export quota to support demand-supply scenario'

New Delhi, Nov 10 (IANS) The government’s decision to increase sugar exports is expected to support the demand-supply scenario, considering a strong recovery expected in sugar production, industry experts said on Monday.

Although the final order is yet to come, the government has reportedly permitted sugar exports of up to 1.5 million tonnes (MT) for the 2025-26 season compared to 1.0 million MT for SY2025, considering a strong recovery expected in the sugar production in the current season, thereby supporting the domestic demand-supply position and sugar prices.

"Net sugar production, post estimated diversion of 3.4 million MT towards ethanol production, is likely to remain around 30.95 million MT. Considering the domestic consumption of 28 million MT and export of 1.5 million MT, the closing sugar stock level is expected to remain around 6.8 million MT, which is about three months of consumption, indicating comfortable sugar inventory levels," ICRA's Vice President and Co-Group Head Corporate Sector Ratings, Ankit Jain, said.

However, the volume of sugar exports will also be influenced by international market prices, which are presently experiencing a downward trend due to record-high sugar production in Brazil, he noted.

Moreover, the removal of export duty on molasses is expected to strengthen the liquidity position of sugar mills.

"The government’s removal of a 50 per cent export duty on molasses is expected to boost cash flow for sugar mills, lower storage costs by reducing inventory build-up, and improve liquidity. It should also help stabilise domestic molasses prices," said Jain.

The Indian Sugar and Bio-Energy Manufacturers Association (ISMA) also welcomed the decision to permit the export of 15 lakh tonnes of sugar this season.

"We welcome the government’s decision to permit the export of 15 lakh tonne of sugar for this season. This timely move will help us plan production for both raws and whites and ease domestic stock pressure," ISMA Director General Deepak Ballani said.

India is the world's second biggest sugar producer. The country exported 7.75 lakh tonnes of sugar in the 2024-25 marketing season, which stretches from October 2024 to September 2025, according to a statement issued by the All India Sugar Trade Association (AISTA) last month.

The top destinations for the country’s sugar exports were Djibouti with 1.46 lakh tonnes, followed by Somalia at 1.35 lakh tonnes, while Sri Lanka was at the third spot with 1.34 lakh tonnes. Afghanistan figured next with shipments of 75,533 tonnes.

A record 4.8 billion litres of ethanol is likely to be produced in the new season from sugarcane-based feedstock.

--IANS

na/vd