India to keep sugar export curbs in blow to local producers

India will retain curbs on sugar exports to ensure adequate supplies for domestic use and to boost the country’s ethanol output, according to people familiar with the matter.

The government wants to make sure there’s enough sugar for the local market at reasonable prices, and on using more cane to produce ethanol, said the people, who asked not to be named as the talks are confidential. Allowing exports is out of question for now, they said.  

Maintaining the restrictions would be a blow for local sugar mills, who have been asking for them to be relaxed. It should also help support global prices, which have fallen by around 12% so far this year. India is the world’s second-biggest sugar producer.  

A spokesperson for India’s food and commerce ministries didn’t respond to a message seeking comment. 

India introduced a quota system for sugar exports in the season ending September 2023 due to poor output, limiting shipments to about 6 million tons, compared with an unrestricted 11 million tons a year earlier. It extended the curbs in October to keep local prices subdued ahead of national elections that were held between April and June. Indian sugar mills had been hoping the restrictions would be relaxed after the polls.

Prime Minister Narendra Modi’s target of increasing the proportion of ethanol in gasoline blends to 20% by the year through October 2026 is one reason the curbs are being kept in place.

The Indian Sugar and Bio-energy Manufacturers Association said last month that the country would have inventories of more than 9 million tons at the end of the season on Sept. 30, and that would be sufficient to meet domestic consumption, exports and sustaining the ethanol blending program. However, the people said that India may only have 8.5 million tons of stockpiles by that date.