Though some said that exports have been banned to check the surge in domestic prices and to ensure that adequate sugar is available in the market in the coming months, others termed it some sort of knee-jerk reaction that might hurt farmers in the long run.
Some even felt that the move might not help the government meet its objective of reining in ex-mill sugar prices that have moved up from around Rs 35-36 a kg to almost Rs 38-40 per kg in the last few weeks in anticipation of low closing stocks and a drop in production.
“The overall pipeline is weak as sugar production in the 2025-26 season (October to September) is expected to be around 27.95 million tonnes as against the earlier projected 29 million tonnes and the closing stock is estimated at 3.8-3.9 million tonnes, significantly down from 5 million tonnes last year,” a senior industry official said.
He said the export ban would at best help the government salvage around 0.2 million tonnes of the sweetener that would have gone out of the country through exports, but how much that would add to the overall supplies remains to be seen.
Farmer leader Raju Shetti strongly criticised the Centre’s decision to ban exports, saying the decision was ‘unwise’ and would hurt both mills and farmers in the form of mounting dues.
The Indian Sugar & Bio-energy Manufacturers Association (ISMA), while acknowledging the rationale behind the government’s move, said the abrupt nature of the restriction could create practical difficulties for mills that had entered into binding commitments with foreign buyers.
It urged the government to allow execution of already concluded export contracts, even as the government imposed a ban on overseas sugar shipments effective May 13 through September 30.
“Permitting execution of already concluded contracts may help facilitate orderly trade settlement and support the credibility of Indian suppliers in the global market,” ISMA Director General Deepak Ballani said in a statement.
For the current sugar season 2025-26 (October-September), the Food Ministry had initially permitted exports of 1.5 million tonnes, subsequently opening an additional 500,000-tonne window, of which only 87,587 tonnes received approval.
Informal reports indicate that nearly 650,000 tonnes have already been physically exported, with an estimated 40,000-60,000 tonnes still in the pipeline under previously sanctioned contracts.
ISMA noted that exports were originally cleared in November 2025 on the basis of optimistic production estimates.
However, output in key cane-growing states, particularly Maharashtra and Uttar Pradesh, fell short of projections due to lower-than-expected yields and adverse weather conditions.
Rating agency ICRA said the export ban would help arrest any sharp rise in domestic prices while safeguarding availability, given expectations of tighter closing inventories.
India’s net sugar production for 2025-26, after accounting for ethanol diversion, is likely to come in at around 28 million tonnes, below earlier forecasts.
With domestic consumption pegged at 28.3 million tonnes and exports already executed at 0.7 million tonnes, closing stocks are projected at approximately 4.3 million tonnes by September 2026, equivalent to roughly two months of consumption, and marginally lower than in previous years, ICRA Vice President & Sector Head Rachit Mehta said.
The outlook for 2026-27 adds another layer of concern. The season is expected to be impacted by El Niño conditions, which could weigh further on sugarcane output and keep supply tight.
Sugar stocks tumble up to 7% after export ban announcement
Shares of sugar companies plunged up to 7 per cent on Thursday after the government banned the export of sugar till September 30 this year with immediate effect.
The stock of Dhampur Sugar Mills tanked 6.95 per cent, Dwarikesh Sugar Industries fell 6.65 per cent, Uttam Sugar Mills dropped 5.60 per cent, Bajaj Hindusthan Sugar declined 4.95 per cent, Mawana Sugars depreciated 4.83 per cent, and Dalmia Bharat Sugar and Industries went lower by 3.98 per cent on the BSE.
Shares of Triveni Engineering & Industries fell 3.85 per cent, Rajshree Sugars & Chemicals declined 3.42 per cent, Sakthi Sugars slipped 2.92 per cent, Balrampur Chini Mills dropped 2.52 per cent, and Shree Renuka Sugars went lower by 2.13 per cent.
Among others, Avadh Sugar & Energy stock fell 1.76 per cent, and EID Parry India slipped 1.64 per cent.
Meanwhile, benchmark equity indices were trading higher, with the 30-share BSE Sensex jumping 522.64 points, or 0.70 per cent, to 75,131.62, while the 50-share NSE Nifty rose 95.65 points, or 0.41 per cent, to 23,508.25 in late-morning trade.
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