India Imposes Full Sugar Export Ban Amid Supply, Climate, and Inflation Concerns

The move comes despite a relatively comfortable domestic supply outlook. Indian sugar mills are projected to produce 279 lakh tonnes in the 2025–26 crushing year. With opening stocks exceeding 50 lakh tonnes as of October 1, 2025, total availability is estimated at 329 lakh tonnes. Domestic consumption is projected at 280 lakh tonnes, leaving a substantial surplus on paper.

Prior to the ban, the government had permitted sugar exports in phases, first allowing 15 lakh tonnes on November 14 and later approving an additional 5 lakh tonnes on February 13, bringing total permitted exports for 2025–26 to 20 lakh tonnes. Of this, approximately 6 lakh tonnes have already been shipped, while another 0.5 lakh tonnes are currently at ports with loading already underway before the notification. This takes total exports to 6.5 lakh tonnes.

After accounting for domestic consumption and actual exports, closing stocks as of September 30 are projected at 42.5 lakh tonnes, the lowest since 39.4 lakh tonnes recorded in the 2016–17 sugar year. This level corresponds to roughly 1.8 months of domestic consumption, considered sufficient to meet demand through the early festival season in November. Mills are expected to begin crushing for the next season from November.

Officials and industry sources cite three primary reasons behind the export prohibition. The first is the emerging risk of El Niño, an abnormal warming of central and eastern equatorial Pacific waters that disrupts global atmospheric circulation. El Niño conditions are forecast by global climate models to develop into a weak-to-moderate phase by July and potentially persist through 2026, raising concerns over the 2027–28 cane crop cycle due to possible monsoon disruption.

The second concern relates to the verification of stock declarations by mills. Authorities have expressed uncertainty over whether all mills are accurately reporting inventories in their monthly P-II returns, raising the risk that declared stocks may not fully match physical availability despite allocated release quotas.

The third factor is inflation management. The government aims to avoid additional pressure on food, fuel, and fertiliser-linked inflation in the event of supply disruptions.

Market dynamics also influenced the decision. Ex-factory sugar prices currently range between Rs 38 and Rs 38.5 per kilogram in Maharashtra and Rs 40 to Rs 40.5 per kilogram in Uttar Pradesh. Export realizations for Indian white sugar are approximately Rs 41 per kilogram, while raw sugar fetches around Rs 34 per kilogram. After accounting for bagging, transport, and port handling costs of about Rs 2.5 per kilogram, export returns fall below domestic realizations, limiting export viability even before the prohibition.

Officials argue that the absence of price parity had already restricted export volumes, and the ban effectively closes the remaining export window entirely