The domestic sugar industry finds itself in a similar situation of ‘problem of plenty’, akin to the 2010s decade, when surplus sugar production outstripped annual sugar demand in the country. The unused sugar stocks led to mounting inventories and unlocked sugar prices. The sugar mills suffered from financial distress, which catapulted to huge cane purchase price arrears.
At a recent event, the Food Secretary said that the next season of 2026-27 is expected to have a higher sugar production, as well. Unless concrete measures are taken, this could soon snowball into a bigger crisis for the industry, as cane purchase price arrears have started piling up in the state of Maharashtra, where cane crushing is higher than the corresponding period of the previous season.
There are a few ways to absorb the extra sugar available in the system. One of the most effective ways is to open up the exports to countries requiring sugar. The Government, in accordance, has announced sugar exports of 15 LMT in November this year.
The industry has welcomed the move, but at the ground level, the decision seems to be garnering a more ‘wait and watch’ approach from the sugar mills.
The international sugar glut situation has pulled down the international sugar prices, and the prevailing prices are not providing support to the Indian exports.
However, as experts opine, there is a short but precious window of opportunity that will be provided beginning next month, when the sugar production in Brazil will go on a hiatus.
Deepak Ballani, DG, ISMA, in a recent interview said that between January and March, there will be a window to export sugar, as the Brazilian crop is not in the market till about April.
The international sugar prices are currently hovering around 14 cents, and international S&D experts believe that the prices will remain low for some time.
In an interview, Rahil Shaikh, Founder & MD at MEIR Commodities, said that for India to start sugar exports, the benchmark would need to be above $480 FOB for shipments to make sense.
He said that the Government should open up sugar export as per the Open General License (OGL). He said, “Those sugar mills which are situated near the ports will export sugar. The Government has real-time export data. They can halt exports as and when they feel it’s enough. So OGL is the name of the game, as I feel that India will be an exporting nation due to price advantages cane crop provides to the farmers”.
The Government came up with a sugar export order in the previous season of 2024-25, wherein the mills were allowed to export about 10 LMT of sugar. However, the total exports of 8 LMT were made, and about 2 LMT remained unexported. Experts said that the industry fell short of exporting the whole quota, and it was quota-based, and the export decision was delayed, leaving mills with a narrow execution window. Also, global prices had softened, reducing export viability.
The Government is closely monitoring the sugar situation for imminent developments both in India and abroad.
It is imperative that the industry carries forward limited sugar stocks, which will meet the normative demand of the first few months, until the new sugar hits the market.
As Rahil said that the European Union exports sugar even when there is no parity to pare inventories. The same strategy could be employed by the domestic mills to cut existing stocks and unlock their value. This will also stabilise the Indian sugar prices and generate a cash flow to support timely cane price payment to farmers and meet other expenses.
Before the start of the crushing season, ex mill sugar prices on 1st of August 2025 were Rs. 3,900 without GST in Maharashtra and today touched Rs.3,550 levels. More export permission or OGL could stop falling domestic prices. It is difficult to survive for millers when they are giving higher price for cane in Maharashtra.
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