India may export 20,000 tonnes of sugar to Kenya despite ban

India, the world’s largest sugar producer, imposed export controls on the sweetener in October last year and later extended it owing to declining production. (Bloomberg)
India, the world’s largest sugar producer, imposed export controls on the sweetener in October last year and later extended it owing to declining production. (Bloomberg)

Summary

  • Sugar production is likely to decline further during the 2024-25 season, although sufficient quantities are expected to be available for domestic consumption

NEW DELHI : India may allow the supply of 20,000 tonnes of refined sugar to Kenya, one of its strategic partners in Africa, overriding an export ban on the sweetener.

This will likely be permitted under the advanced authorisation scheme, a government official informed. Under AAS, refineries can import raw sugar and export refined sugar after value addition.

India, which surpassed Brazil in the 2021-22 season to become the world’s largest sugar producer and second-largest exporter, imposed export controls in October last year. This was later extended beyond October 2023 considering an expected decline in production.

“Although India will have sufficient availability for domestic consumption, there may not be any surplus quantity for exports due to anticipated lower production this year than the previous year," said the official.

“Therefore, it has been suggested that the refineries that import raw sugar and export refined sugar after value addition under AAS, to export the quantity to Kenya."

The external affairs ministry, the commerce and industries ministry, and the food and public distribution department did not immediately reply to queries on the matter.

AAS is not restricted under the sugar export policy and no separate permission is required from the government. The scheme allows duty-free import of raw materials that are to be incorporated in products meant for exports. 

The official quoted earlier said the ministry of external affairs has recommended exporting 20,000 tonnes of sugar via sea, a more cost-effective route, against Kenya’s request for 500,000 tonnes of the sweetener.

India supplies 10,376 tonnes of sugar on average to Kenya each financial year, according to commerce ministry sources. Earlier this month, the government allowed exports of 100,000 tonnes of non-basmati white rice to Kenya and 140,000 tonnes to four other African nations, overriding an existing ban. 

India’s sugar production in the 2023-24 season (October-September) is estimated to have dropped to 30-30.5 million tonnes, after diversion for ethanol, against domestic consumption of 27.5-28 mt. The country produced 32.7-32.8 mt of sugar in the year prior.

The lower output is due to the El Nino weather condition compromising monsoon rains in August, top-producing states Maharashtra and Karnataka hard. 

El Nino is anticipated to strengthen through 2023-24, which could lead to intensification of dry conditions during the next sugar season. This may lead to a further decline in sugar production during the 2024-25 season. 

As India nears the crucial general election in a few months, the government has escalated export curbs to stabilise prices amid a significant jump in food inflation. 

It recently asked sugar mills to not use cane juice to make ethanol and to ramp up production of sugar to make up for lower anticipated crop following patchy monsoons. Besides sugar, India has placed curbs on wheat, rice and onion exports. 

Food inflation, measured by the consumer food price index, which accounts for nearly half of the overall consumer price basket, rose to 8.70% in November from 6.61% in October and 6.62% in September because of a substantial rise in the prices of vegetables and pulses.

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