India is set to extend its ban on sugar exports for a second consecutive year as it faces declining sugarcane production, according to government sources. This decision comes as the country, the world’s largest consumer of sugar, anticipates lower cane output due to adverse weather conditions.
In addition to the export ban, New Delhi plans to increase the purchase price of ethanol from sugar mills to enhance biofuel supplies. This move is part of India’s broader strategy to boost ethanol blending in gasoline, aiming to raise the ethanol content from the current 13-14% to 20% by the 2025-26 fiscal year.
The absence of Indian sugar in the global market is expected to tighten supplies, driving up benchmark prices in major markets like New York and London. The ban will coincide with a predicted drop in sugar supplies from Brazil, the world’s leading sugar producer, due to drought conditions.
Government sources indicated that fulfilling local sugar demand is the priority, with ethanol blending as the next focus, necessitating increased sugarcane production. The anticipated sugar output for the upcoming 2024-25 season is projected to decline to 32 million metric tons from 34 million metric tons this year, influenced by last year’s uneven rainfall in key producing states like Maharashtra and Karnataka.
The government is also considering raising the ethanol procurement price by over 5% for the new marketing season starting in November. Furthermore, a recent order allows sugar mills to use cane juice or syrup for ethanol production beginning in November, marking a significant shift in production practices.
These plans to extend the sugar export ban and adjust domestic ethanol prices have not been previously disclosed and are expected to be officially announced later this month.
