Shares of sugar companies were under pressure for the second straight day on Wednesday, a day after the government announced restrictions on sugar exports that kick in from June 1, the latest in a string of measures to curb surging inflation. The rationale is to curb sugar exports and reduce the price of sugar in the domestic markets. “As per the order issued by DGFT, with effect from 1st June, 2022 till 31st October, 2022, or till further order, whichever is earlier, the export of the sugar will be allowed with specific permission of the Directorate of Sugar, Department of Food and Public Distribution,” it said.
“Taking into consideration unprecedented growth in exports of sugar and the need to maintain sufficient stock of sugar in the country as well as to safeguard interests of the common citizens of the country by keeping prices of sugar under check, Government of India has decided to regulate sugar exports,” it said.
India has seen record inflation in the past month amid a price surge in food and oil, and the government is taking steps to control it. A few days ago, the Centre had decided to stop wheat exports, despite India being a top wheat exporter globally.
However, it said that these restrictions would not be applicable to sugar being exported to the European Union and the US under CXL and TRQ. A specified amount of sugar is exported to these regions under CXL and TRQ. In a statement, the government said that with a view to maintaining domestic availability and price stability of sugar in the country during sugar season 2021-22 (October-September), it has decided to regulate the sugar exports with effect from June 1.
Sugar Stocks Tumble
Dwarikesh Sugar Industries dropped 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 was down 5 percent in the morning trade.
In the past one week, the stock prices of sugar companies have declined in the range of 15 per cent to 20 per cent, as against a 0.21 per cent fall in the benchmark index.
India is the world’s biggest sugar producer and the second biggest exporter behind Brazil.
Initially, India planned to cap sugar exports at 8 million tonnes but the government later decided to allow mills to sell some more sugar after production estimates were revised upwards. Since 2010-11, India has consistently produced surplus sugar, comfortably exceeding the domestic requirements, the government has claimed.
India’s sugar exports had increased 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 across the globe, it said.
Earlier, Indian Sugar Mills Association, an industry body of the sugar companies, had projected that India’s sugar export may touch 85 lakh tonnes in the ongoing 2021-22 marketing year ending September.
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