Midst the scenario of the Indian Sugar Industry emerging as the biggest producer in the world surpassing Brazil for the first time ever in the history of sugar, however, the country is facing its most consequential challenges in spite of several
sweet dozes from the Govt. in form of packages. The problems the industry confronts today are many, and stem mainly from high production in 2017-2018 and 2018-2019 seasons, exceeding domestic demand.
India has broken the global record by hitting 32 million tonnes in 2017-18 and is projected to have an output of 35 million tonnes in the 2018-19 season (October-September).
The country has been facing a tough situation in clearing dues to cane growers due to poor price realization in domestic markets and depressed global prices.
Sweeteners from the Govt.:
The government raised export subsidy to Rs.13.88 a kg for this year from Rs.5.50 a kg last year. It also allowed 5 million tonnes of sugar exports for the year 2018-19, beginning in October 2018, from 2 million tonnes allowed for the previous year under the Duty-Free Import Authorisation (DFIA) scheme. Under this scheme, exporters are allowed to import sugar at zero duty within three years. Of the 2 million tonnes, sugar mills have only been able to export around 0.5 million tonnes so far this year, even as the season comes to an end.
Upcoming Season 2018-19:
India’s output stood at 32 million tonnes in 2017-18 and is set to rise to over 35 million tonnes in 2018-19 following an increase in cane acreage. With an estimated 25.4 million tonnes of consumption, India is set to end the current season with over 9 million tonnes of carryover stock. Under normal circumstances, India’s total excess sugar output is estimated at 16.5 million tonnes by the end of 2018-19.
As the Indian sugar sector steps into a new season, it looks forward to more exports, price stability in the domestic market, and clearance of cane arrears to farmers.
Exports – But How & When?
This season, the industry wants the government to make exports compulsory for each sugar mill and, simultaneously, if prices in the domestic market improve a bit, it may compensate the loss on exports.
In Indian rupees, the international price is just around Rs.1700-1800/ quintal. The price on the domestic National Commodity Exchange (NCDEX) is significantly higher at Rs.3100/quintal. According to the International Sugar Association, international sugar prices are at ten year low. This might be the reason that export might not work as international sugar prices are a fraction of domestic prices and sugar mills may not find it attractive even though new incentives are announced. The total export of sugar has come down significantly in the last two years this is due to the lower international sugar prices.
Based on the above facts & figures, seems that the Govt. has done its bit in giving a push to the industry for exports but the question still remains unanswered that how and when exports will happen!