Table of Contents
What has happened?
- In a significant move, the government placed restrictions on sugar exports today to prevent a surge in local prices.
- According to reports, the govt has told traders to secure permission for overseas sale of sugar from June 1 to October 31.
- The move primarily seeks to improve availability of the sweetener in the domestic market and check price rise.
- “Export of sugar (raw, refined and white sugar) is placed under restricted category from June 1, 2022 onwards,” the Directorate General of Foreign Trade (DGFT) said in a notification.
- As per the notification, “The government has decided to allow export of sugar up to 100 LMT (Lakh Metric Tonnes) with a view to maintain the domestic availability and price stability during the sugar season 2021-22 (October-September).“
- The move, which was decided after evaluations by an inter-ministerial panel, seeks the export cap for the marketing year that runs from October to September.
First time in 6 years
- The curbs on sugar export come for the first time in six years.
- The country last restricted export of the sweetener by imposing an export duty of 20% in 2016.
impact
- India is the world’s second-largest sugar producer and exporter behind Brazil.
- A smaller cane crop in the world’s top producer Brazil and high global oil prices have increased overseas demand for Indian sugar.
- Export restrictions by India will send international prices soaring in the middle of a global commodities-price spiral.
- The government has also set up a cross-ministry panel to monitor prices of all imported commodities, especially industrial raw materials, the official cited above said.
- Along with the May 13 ban on private wheat export, whose effects rippled across the globe by pushing up prices, these steps mark an aggressive stance to tame runaway inflation.
- Consumer prices in April leapt to an eight-year high of 7.79%, well above the Reserve Bank’s tolerance limit of 6% for four straight months, threatening growth and stoking public angst.
More for Ethanol
- A restriction on exports will make more of the surplus sweetener available for domestic ethanol-making, for which the country has set new fuel-blending targets and is a top government priority.
- Mixing petrol with ethanol, which is made from molasses, a byproduct of sugar, will help lessen the amount of oil India imports.
- “In order to find a permanent solution to address the problem of excess sugar, government is encouraging sugar mills to divert excess sugarcane to ethanol,” an official statement on May 19 said.
- The Union Cabinet last Wednesday approved amendments to the National Policy on Biofuels 2018, Approving the advancing of the target of blending 20% ethanol in petrol by five years to 2025-26 from 2030.
- India is the third-largest oil consumer and importing nation in the world.
- Its crude oil import bill was US$ 119.2 billion in FY22, sharply higher than US$ 62.2 billion in the previous fiscal year, according to data from the oil ministry’s Petroleum Planning & Analysis Cell.
- “Sugar production has been at a record high, but exports are also very high.
- This could lead to a situation of high prices in the coming months, especially during the autumn festival season,” the official quoted above said, requesting anonymity.
Sugar production
- The Indian Sugar Mills Association said, India’s output in the current season is expected to be 35MT while domestic consumption is about 27MT.
- Current stocks include last season’s 8MT, making for a surplus of 16MT.
Sugar exports
- In sugar seasons 2017-18, 2018-19 and 2019-20, only about 6.2 LMT, 38 LMT and 59.60 LMT of sugar was exported, the statement said.
- However, in the sugar season 2020-21 against a target of 60 LMT about 70 LMT have been exported.
- In the current sugar season 2021-22, contracts for export of about 90 LMT have been signed, about 82 LMT sugar has been dispatched from sugar mills for export and about 78 LMT have been exported.
- Export of sugar in the current sugar season 2021-22 is the historically highest, the statement said.
exception
- These restrictions won’t apply to sugar being exported to the EU and the US under CXL and TRQ, the notification added.
- It is worth noting here that a specified amount of sugar is exported to these two regions under CXL and TRQ.
conclusion
- India’s restriction is similar to steps introduced by many other governments in the wake of the Ukraine war that has led to food prices rising sharply in many parts.
- Some of these include Malaysia’s exports halt on 3.6 million chickens from June 1, Indonesia’s recent palm oil export ban, India wheat export restriction.
- Some other nations have placed quotas on grain shipments.
- India has already abolished the basic import tax on crude palm oil, crude soyoil and crude sunflower oil, but continues with the 5% Agriculture Infrastructure and Development Cess (AIDC) on these three grades of edible oils.
- India imports more than two-thirds of its edible oil needs and a sharp drop in the supplies of sunflower from the Black Sea region has further stoked local prices.
Q) What type of climate is required for sugarcane?
- Hot and dry
- Hot and wet
- Cold and dry
- Cold and wet
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