What are the reasons behind India's ban on sugar exports?

What are the reasons behind India’s ban on sugar exports?

 

Unlike wheat, India has not imposed a complete ban on its sugar exports. But traders need to seek permission to export from June 1.

After wheat, the government of India has now imposed restrictions on sugar exports. The notification by the Directorate General of Foreign Trade states that the state will impose new restrictions from June 1. The government took this decision to regulate inflation. It is to increase the availability of sugar in the domestic market. As a result, the high food prices will automatically come down.

The government has taken various steps to reduce the prices of essential items in the domestic market. Presently the economy is going through unprecedented inflation due to several reasons. Some of the reasons behind the present situation are the Russia Ukraine war, severe heatwave, and rising fuel prices.

According to the orders of DGFT, the traders can export sugar only with the permission of the directorate of sugar. The Department of food and public distribution has released a notification. It is to remain effective till October 31, 2022, from June 1, or till further notification, whichever is earlier. So let us look at the reasons behind the ban on sugar exports in detail.

Why does the government put restrictions on sugar export?

The government has not completely restricted sugar export like wheat.

India is the largest producer and second-largest exporter of sugar in the world. Brazil comes at the first position in the export list.

Export of raw, white, and refined sugar is under restriction from June 1, 2022. Traders can export only up to 100 LMT of sugar to regulate price rise and domestic availability. The Indian economy is going through record inflation for the past few months. There is a huge price rise in oil and food commodities. The decision to limit sugar export comes when retail inflation in India reached an 8-year high of 7.79% in April.

Major producers restricting their agricultural exports signify an increase in food protectionism across the world.

The estimated sugar production in India

Maharashtra is the top sugar-producing state in the country. It produced over 22 Lac hectares of sugar in the previous year. Moreover, the better monsoon resulted in a record sugar cane yield in 2021-22. According to the reports, this year, Maharashtra will produce 30% more sugar cane than last year with 138 lakh tons.

In India, sugar production has increased by 14%, with a yield of 34.2 million tons. Probably it would reach up to 35.5 MT by the end of the season.

According to a statement of DGFT, the wholesale sugar price in India is between INR3150 to 3500 per quintal. However, the retail cost of sugar in the domestic market is Rupees 36 to 44 per KG.

Impacts of sugar export ban on the world

The ban on exports may globally impact the sugar market as India is the second-largest exporter and the largest producer. This move may increase international sugar prices. However, the authorities have claimed that India will continue to export to its neighbors and vulnerable countries.

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