India Imposes Restrictions On Sugar Exports – Free PDF Download

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?

1. Hot and dry
2. Hot and wet
3. Cold and dry
4. Cold and wet

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