The move comes at a time when prices have surged sharply in various commodities including tomato, wheat and pulses.
"To keep the domestic prices of sugar under check, the government has decided to impose export duty of 20 per cent on the export of raw sugar, white or refined sugar," the Finance Ministry said in a release.
A decision has been notified by the Central Board of Excise and Customs (CBEC), it said.
The duty has been imposed to restrict exports following sharp rise in global prices. The duty is, however, lower than 25 per cent proposed by the Food Ministry.
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With retail sugar prices soaring to around Rs 40/kg from Rs 30/kg six months ago, the government has taken various steps to contain prices including withdrawal of export-linked production subsidy and imposition of stock limits on traders.
Last week, Food Minister Ram Vilas Paswan had announced that his ministry has proposed to "levy 25 per cent custom duty on export of sugar" to keep exports under control.
Industry body Indian Sugar Mills Association (ISMA) did not offer any comments immediately.
However, a senior industry official welcomed the decision in view of tight demand-supply situation expected in the next 2016-17 marketing year starting October.
With imposition of export duty, the official said that exports have become unviable.
An increase of 50 per cent in global sugar prices in last three months due to disruption in supply from Brazil had made exports viable.
The country's sugar production is estimated to decline to 25 million tonnes in 2015-16, as against 28.3 million tonnes last year. The annual domestic demand is pegged at 26 million tonnes.
have the opening stock of 7 million tonnes at the start of the next marketing year, taking total availability to 30-31 million tonnes.