Sugar export ban may stay on festive demand

The government is unlikely to lift the ban on sugar exports anytime soon. With the festival season beginning this month, the government is keen to ensure that there is no shortage of the commodity in the domestic market.

"We have important festivals, like Durga Puja and Diwali, coming up and the consumption of sugar is higher during this period. If the export ban is withdrawn at this time, it would lead to a price rise and affect the consumers," a top government official told Business Standard.

Food ministry officials also indicated that any decision to lift the export ban on sugar was likely to be done only after the festive season is over.

The decision by the mills to start crushing in November instead of October may also prompt the government to review the ban only in November.

The government had banned exports of sugar on July 4 for a period of nine months on the basis of the recommendation of the Cabinet Committee on Prices. Two weeks after the decision to ban exports, Agriculture Minister Sharad Pawar had said the ban would be reviewed in October.

The decision to ban the export was also applicable to the companies with export obligations against duty-free import of raw sugar under the Advance Licence (AL) scheme.

Companies like Renuka Sugar, Dhampur Sugar, Sakthi Sugar, EID Parry and Thiru Arooran among others had imported about 26 lakh tonne of raw sugar between 2002-03 and 2004-05 seasons (October-September) under the Advance Licence scheme.

Under this scheme, companies have to re-export one tonne of white sugar against every 1.05 tonne of raw sugar imported within a period of two years.

Of the total amount, about 10 lakh tonne have been exported so far. At the NCDEX, the price of M grade sugar for October delivery has increased from Rs 1,822 a quintal on September 1 to Rs 1,859.