India extends sugar export restrictions

India is restricting sugar exports to ensure domestic supplies, which may lead to an increase in the cost of the food industry. Raw sugar futures have reached a peak since 2011 due to concerns over supply cuts. The Indian government is compelled to take such measures due to poor harvests and upcoming elections.

19 October 2023

India, the world's second-largest sugar producer, has extended export curbs in a bid to protect domestic supplies. The decision is likely to tighten the global market and increase costs for the food industry. India introduced quotas in 2022-2023 and limited sugar exports to about 6 million tons after a reduced harvest due to late rains, Bloomberg reports.

Raw sugar futures are nearing their highest level since 2011 on concerns about dwindling supplies from India and Thailand. While the ban may lower domestic prices in India, it is a blow to global producers of a variety of products including carbonated drinks, chocolates and baked goods.

The Indian government does not want to risk inflation, especially ahead of the upcoming multi-state and national elections in 2024. The country is facing its weakest monsoon in five years and any decline in agricultural production will increase pressure on authorities to control food prices.

4. These export restrictions do not apply to sugar supplied to the European Union and the United States under certain quotas. Domestic sugar prices have increased by 3% since the beginning of the year. Most analysts and traders surveyed suggest that India may not export sugar this season due to low production levels.

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India extends sugar export restrictions

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