Shares of sugar companies came under pressure for the second day in a row on Wednesday, a day after the government announced restrictions on sugar exports effective June 1, the latest in a series of measures to curb rising inflation. The rationale is to curb sugar exports and lower the price of sugar in the domestic markets. “According to the order of DGFT, from June 1, 2022 to October 31, 2022, or until further notice, whichever is earlier, the export of the sugar will be authorized with specific authorization from the Directorate of Sugar, Ministry of Food and Public Distribution,” it reads.
“Considering the unprecedented growth in sugar exports and the need to maintain sufficient sugar stocks in the country and protect the interests of the country’s ordinary citizens by controlling sugar prices, the Government of India has decided to sugar exports,” it said.
India has seen record inflation for the past month amid a rise in food and oil prices, and the government is taking steps to contain it. A few days ago, the Center had decided to halt wheat exports, despite India being a major wheat exporter worldwide.
However, it said these restrictions would not apply to sugar exported to the European Union and the US under CXL and TRQ. Under CXL and TRQ, a certain amount of sugar is exported to these regions. In a statement, the government said that in order to maintain domestic availability and price stability of sugar in the country during the 2021-22 sugar season (October-September), it has decided to regulate sugar exports from June 1.
Sugar stocks tumble
Dwarikesh Sugar Industries fell 8 percent, Dalmia Bharat Sugar and Industries 7 percent, Triveni Engineering & Industries 6 percent, Balrampur Chini Mills 8 percent, Avadh Sugar & Energy lost 6 percent, Shree Renuka Sugars 4 percent and Uttam Sugar fell 5 percent in the morning trade.
Over the past week, stock prices of sugar companies have fallen 15 to 20 percent, against a 0.21 percent drop in the benchmark index.
India is the world’s largest sugar producer and the second largest exporter after Brazil.
Initially, India planned to limit sugar exports to 8 million tons, but the government later decided to allow the factories to sell some more sugar after production estimates were revised upwards. Since 2010-11, India has consistently produced excess sugar, far exceeding its domestic needs, the government has claimed.
India’s sugar exports had risen to $4.6 billion (about Rs 35,000 crore) in 2021-22 from $1.17 billion (about Rs 9,000 crore) in 2013-14, the Commerce Ministry had said in April. India exported sugar to 121 countries around the world, it said.
Earlier, Indian Sugar Mills Association, a trade association of the sugar companies, had forecast that India’s sugar exports could reach 85 lakh tons in the current 2021-22 marketing year ending in September.
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