India To Redirect 350,000 Tonnes Of Export-Bound Sugar As Domestic Supply Tightens

Indian sugar refiners will divert around 350,000 tonnes of sugar originally meant for export to the domestic market after authorities cleared the move to ease a supply shortage, according to a Bloomberg report.

The stockpiles could be released to domestic buyers within a week, according the news agency. The quantity would be enough to meet India's total sugar demand for almost five days and could help bring down prices that hit a record high last week.

The move comes ahead of India's peak festival season, when demand for sugar rises sharply. The country is the world's second-largest sugar producer but is facing tighter supplies after a smaller-than-expected crop caused by uneven rainfall and crop diseases in key growing regions.

Why India Is Facing A Sugar Supply Crunch

India's sugar demand typically rises from late August through January as consumers buy more traditional sweets and processed foods during the festival season.

Average ex-mill sugar prices in India climbed to ₹67 per kg last week, according to Prakash Naiknavare, managing director of the National Federation of Cooperative Sugar Factories, the news agency reported. Prices have since eased to around ₹54-55 per kg following the government's August 20 announcement allowing duty-free imports.

Naiknavare said government intervention would help cool prices further and provide relief to consumers during the festival season. The release of export-bound stocks could provide additional near-term supplies without waiting for imported sugar to arrive.

Duty-Free Imports To Add More Supply

The government has allowed 1 million tonnes of duty-free sugar imports under the new rules. However, actual imports could be lower as domestic prices have eased.

Five traders, analysts and millers surveyed by Bloomberg estimate that duty-free imports could total 300,000-600,000 tonnes by the end of October, below the approved quota.

The softer domestic prices could reduce the incentive for mills and refiners to bring in the full permitted quantity. Imports would still be required later, with supplies from Brazil expected to provide additional relief, the people said to the news agency.

India's decision to allow imports has also affected global sugar prices, although the impact has eased in recent sessions as expectations grow that India may not need to import as much as initially anticipated.