India, the world’s second-largest producer of sugar, may not be able to export more than one million tonnes (mt) of the sweetener in the current season ending September 2007, despite the government giving subsidy to the mills to boost overseas sales, according to industry experts.
“The export scenario is not bright. We will not be able to export more than 1mt of sugar in the current season both under open general licence and advance licence scheme,” a sugar industry official said.
He said the demand for Indian sugar was very little. Also, prices of the sweetener in the international markets were falling due to huge surplus globally.
Since January when the government completely lifted the ban on sugar exports, the country has exported about 0.55mt, the official said.
The ban was imposed in mid-2006 to contain rising domestic sugar prices and inflation.
Prices of sugar for delivery in October at London has come below $300 (Rs12,300), he said, adding the sugar prices were ruling at more than $450 when the ban was imposed.
The only way sugar mills could have exported the targeted 2mt in the next one year was through export of raw sugar, but the government has not provided any subsidy on this, the official said.
“There is demand of about 4mt of raw sugar from countries which are close to India such as the UAE, Egypt and Bangladesh as they have the refineries,” he said.
Echoing similar views, Rakesh Sharma, a senior sugar trader at KS Commodities, said there was no demand for Indian sugar in global markets.
“Buyers are not keen to enter into any contract at this stage,” he said, adding sellers were asking a price of $280-285 per tonne.
On the subsidy not extended to exports under the advanced licensing scheme, the industry official said the demand was “totally unjust” as the mills had imported the raw sugar at zero duty and earned huge profit by selling it after refining.
India is likely to produce over 26mt of sugar in the 2006-07 season (October-September) as against 19.2mt in the previous year.
With opening stock of about 4mt, the sugar availability in the country would be over 30mt.
The surplus sugar would be over 10mt as domestic consumption is projected at 19-19.5mt.