Bitter Sweetness: Why India Suddenly Shut the Door on Sugar Exports

By: Shreya Maheshwari Goel

On May 13, the central government banned the export of raw, white and refined sugar till September 30, 2026, citing concerns over domestic availability and rising uncertainty around future production. The decision comes amid fears of weaker monsoon conditions, rising inflationary pressures and lower sugar output estimates.

On May 13, the central government imposed an immediate ban on the export of raw, white and refined sugar till September 30, 2026. The Directorate General of Foreign Trade (DGFT) moved sugar exports from the “restricted” category to “prohibited”, effectively shutting outbound shipments except for limited quota-based exports to the United States and the European Union, along with certain government-approved consignments. 

The decision comes only months after the government had allowed mills to export nearly 1.59 million metric tonnes of sugar this season, expecting domestic production to remain comfortably above demand. However, concerns over falling production, rising domestic prices, uncertain monsoon conditions and global commodity pressures appear to have pushed the government towards a more cautious approach. 

India is expected to produce around 275-279 lakh tonnes of sugar in the 2025-26 season, while opening stocks stood at around 50 lakh tonnes. Total sugar availability is therefore estimated at nearly 325-329 lakh tonnes. Domestic consumption alone is projected at around 280 lakh tonnes. After accounting for exports already completed or currently in the pipeline, closing stocks could fall to nearly 42.5-45 lakh tonnes by September 2026. 

These are expected to be the lowest sugar stock levels since 2016-17, when closing stocks had fallen to around 39.4 lakh tonnes. While the current availability is still considered manageable, the government appears unwilling to risk a supply squeeze next year. 

A major concern is the possibility of El Niño conditions affecting the upcoming monsoon season. Climate models are forecasting a weak-to-moderate El Niño emerging around July, with the possibility of it continuing through 2026. Such conditions are generally linked with below-normal rainfall and higher temperatures in India. 

The immediate sugar crop may not face significant stress because the standing cane already has access to water. But the bigger concern is the next planting cycle, particularly the cane crop that farmers are expected to sow from July onward for the 2027-28 sugar season. There are also concerns over fertiliser availability because of the ongoing West Asia crisis. Sugarcane is both water and fertiliser-intensive, and any disruption in fertiliser supplies could impact yields in the coming seasons. 

At the same time, domestic sugar prices have been rising steadily, increasing worries around food inflation. With India already dealing with pressure from rising crude oil prices, imported inflation and a weakening rupee, policymakers appear focused on protecting domestic supplies rather than encouraging exports. 

The export ban is also tied to India’s ethanol blending programme. Over the past few years, sugar mills have increasingly diverted sugarcane towards ethanol production as part of the government’s target of achieving 20% ethanol blending in petrol. While this helps reduce dependence on imported crude oil, it also reduces the quantity of sugar available for domestic consumption and exports. Industry analysts had already warned that aggressive ethanol expansion, combined with weaker sugarcane production, could eventually force India to curb sugar exports. 

Another issue reportedly worrying the government is the accuracy of stock declarations by sugar mills. Mills are required to file monthly stock details through P-II forms, based on which the government allocates monthly sales quotas. However, concerns remain over whether all declared stocks are physically available with mills. 

Global markets reacted immediately after the announcement. New York raw sugar futures rose more than 2%, while London white sugar futures jumped around 3%. Since India is among the world’s largest sugar exporters after Brazil, any restriction on Indian exports tightens global supply, particularly for buyers across Asia and Africa. 

The sudden policy reversal may also create difficulties for traders and mills that had already entered export agreements after the government expanded export quotas earlier this year. Stock markets reflected those concerns as shares of major sugar companies, including Dwarikesh Sugar and Balrampur Chini, fell by up to 4% after the export ban was announced.