Sugar Exports Restrictions by India: Major Decision to Achieve Twin Targets of Reducing Country's Petroleum Import Bill and Curbing Rise in Sugar Prices
This article discusses the latest Decision of Indian government to cut sugar exports. It presents the need of this decision in details with current data of sugar exports. It also explains how the entire scenario is related to crude oil prices which is tactfully required to reduce by such steps by government of India.
Background
Current News
Exception
Sugar Related Statistics
Reasons to Impose Export Restriction on Sugar
Impact of Decision
Background
India ranks second globally in terms of production and export of sugar. Top producer and exporter of sugar is Brazil. Simultaneously, India also has high domestic consumption of sugar. Sugar production requires sugarcane as raw material. Thus, production of sugar is very much dependent on crops of sugarcane.
Current News
Latest decision about sugar exports is out in a notification issued by DGFT (Directorate General of Foreign Trade), Department of Food and Public Distribution under aegis of Ministry of Commerce and Industry. The notification states that India will export sugar up to a maximum of 100 lakh metric tonnes only. Restricted sugar includes raw, refined and white sugar.
Exception
This export restrictions is not applicable to the exports to European union and US due to agreements of minimum exports which are CXL and TRQ respectively.
Sugar Related
Statistics
According to Indian Sugar Mill Association:
India’s expected output in current season = 35MT
Domestic sugar consumption = 27MT
Current sugar stock = 8 MT
(MT = Million tonnes)
|
Year |
Sugar Export (Million Tonnes) |
|
2017 - 18 |
0.62 |
|
2018 - 19 |
3.8 |
|
2019 - 20 |
5.96 |
|
2020 - 21 |
7.00 |
Reasons to Impose Export
Restriction on Sugar
The notification regarding restriction on sugar exports is made
to fulfil two objectives.
(1 (1) To rein control over rise of sugar prices in domestic
market
(T (2) To achieve target of 20% ethanol blending in petrol by 2025 – 26
In the beginning, we discussed that Brazil is the largest producer and exporter of sugar in the world. Thus, it is seen as foremost supplier of sugar to various countries. But this year, their sugarcane crops were not good thereby impacting their sugar production. So world is looking at second largest supplier of sugar to meet their sugar demands. And second supplier is India. Ultimately, demand of Indian sugar has rise too much. Another reason for high India sugar demand is Russia - Ukraine war. So overall, India can face trouble to meet its domestic demand if it continues to supply to other countries. Moreover, this situation may lead to rise in sugar prices. Thus, export restrictions was necessary.
Another cause is National Biofuel Policy 2018. This policy set a mission to achieve 20% blending of ethanol in petrol by 2030. The purpose is to reduce our crude oil Import Bill. Nation’s 2/3rd demand of crude oil is met by imports. In financial year 2021, India’s crude oil import bill was USD 62.2 billion which increased to USD 119.2 billion in financial year 2022. The data is worrisome. So government of India preponed the target of National Fuel Policy by 5 years. Current target is to achieve 20% ethanol blending by 2025 – 26. This target needs strategic planning because usage of sugarcane crops have to be diverted for ethanol production by fermentation. So, lesser sugarcane will be available for sugar production. Thus, keeping in mind the anticipation of sugar scarcity, government decided to reduce sugar exports so that available sugar can be used to meet the domestic sugar demands.
Impact of Decision
(1 The decision to reduce sugar exports and focus on EBP (Ethanol Blending Programme) can have following implications:
Use of sugarcane for ethanol production by fermentation will make it a cash crop. So more fields will be used for this crop. This can negatively impact wheat crops as lesser area shall be used for wheat cultivation.
(2 Sugarcane cultivation needs abundant quantity of
water. It’s cultivation can lead to fall of water table.
(S Sugar prices may be protected from spike and its availability to meet local needs will be ensured.
This decision is taken strategically. It will help to keep sugar stocks to meet domestic demand. Simultaneously, National Biofuel Policy’s target will be achieved faster. If this target is accomplished, India’s dependence on other countries for import of crude oil will be reduced. It will itself reduce prices of all goods as transport of all consumer goods is dependent on price of crude oil.
See Other Posts:
Children Rights in India, Women Safety in India
No comments