India bans sugar exports to cool domestic prices, risks global shortage shock – Firstpost

India has banned exports of raw, white and refined sugar with immediate effect until September 30, 2026, as New Delhi moves to safeguard domestic supplies and contain inflation risks amid mounting uncertainty triggered by the ongoing conflict in West Asia.

In a late Wednesday notification, the Directorate General of Foreign Trade (DGFT) said the export prohibition would remain in force until the end of September or until further orders. The move marks a major policy reversal by the government, which had earlier allowed limited sugar exports on expectations of surplus production.

The curbs come at a time when concerns over global energy prices, supply disruptions and inflationary pressures have intensified following the conflict in West Asia, which has disrupted shipping and fuel markets worldwide.

Export ban linked to inflation, supply fears

The decision seems to be driven by fears that India’s sugar balance sheet could tighten sharply if the next monsoon underperforms or fertiliser supplies are hit by prolonged geopolitical disruptions.

The government is particularly wary of a possible decline in 2026-27 sugar production due to subnormal rains linked to El Niño conditions and anticipated shortages in fertiliser availability stemming from the West Asia crisis.

India’s sugar production for the 2025-26 season, which runs from October to September, is estimated at around 275 lakh tonnes. With opening stocks of 50 lakh tonnes, total availability stands at roughly 325 lakh tonnes.

Domestic consumption is projected at around 280 lakh tonnes, leaving closing stocks of just 45 lakh tonnes — the lowest level since the 2016-17 season, when inventories fell to 39.4 lakh tonnes.

That relatively thin buffer appears to have pushed the government toward a precautionary approach despite current supplies being technically adequate.

Limited exemptions for strategic and quota-based exports

The DGFT clarified that the export prohibition would not apply to shipments to the European Union and the United States under preferential quota arrangements.

Exports under the Advance Authorisation Scheme (AAS), government-to-government arrangements and consignments already in the physical export pipeline will also continue.

The notification said shipments would be permitted if loading had commenced before May 13 or if consignments had already been handed over to customs authorities before the order took effect.

“The export of sugar shall be allowed on the basis of permission granted by the Government of India to other countries to meet their food security needs and based on the request of their governments,” the notification stated.

Traders face disruption after export approvals

The sudden policy reversal is expected to create complications for traders and sugar mills that had already signed overseas contracts after the government earlier approved exports of 1.59 million metric tons.

Trade estimates suggest contracts had been signed for around 800,000 tons, with more than 600,000 tons already shipped before the ban.

Global sugar prices surge after India move

International sugar markets reacted sharply to the announcement, with New York raw sugar futures extending gains to more than 2 per cent, while London white sugar futures jumped around 3 per cent.

India is the world’s second-largest sugar producer after Brazil and one of the biggest exporters globally. Any restriction on Indian supply tends to tighten global availability, particularly for buyers in Asia and Africa.

West Asia conflict reshapes India’s economic calculations

The export ban comes just a day after the government
raised import duties on gold and other precious metals in an effort to curb non-essential imports and conserve foreign exchange reserves.

The twin moves underscore New Delhi’s growing focus on insulating the domestic economy from external shocks as the conflict in West Asia rattles commodity and shipping markets.

Global fuel prices have surged since the conflict erupted on February 28, while commercial shipping through the strategically critical Strait of Hormuz has faced severe disruption.

The waterway accounts for nearly one-fifth of global oil and liquefied natural gas flows, making it one of the world’s most important energy chokepoints.