India has given the green light for the export of 1.5 million metric tons of sugar for the 2025-26 season, a move driven by a higher-than-expected domestic surplus. This decision, which follows deliberations between the Food Ministry and industry stakeholders, aims to reduce domestic stocks, stabilize local prices, and support sugar mills and farmers. The export quota has been allocated to mills based on their past production capabilities, with all sugar grades being eligible for shipment.
The government's decision is influenced by a decline in the diversion of sugar for ethanol production, which has resulted in a larger domestic surplus. The Indian Sugar & Bio-Energy Manufacturers Association (ISMA) reported that India's net sugar output for the 2025/26 season is estimated at 30.95 million tons after diverting about 3.4 million tons for ethanol production, an 18.5% increase compared to the previous year. This is in contrast to earlier expectations of 4.5 to 5 million tons of sugar being diverted for ethanol.
A government official stated that the decision to allow sugar exports was made keeping in mind the surplus stocks and the interests of farmers. The move is expected to improve liquidity for sugar mills, enabling them to make timely payments to cane farmers and maintain healthy domestic price levels. Industry representatives have welcomed the decision, noting that the global market currently offers favorable prices for Indian sugar. An ISMA official noted that with international demand improving and global prices firming up, this timely clearance will help India maintain its presence in key export destinations such as Indonesia, Bangladesh, and Sri Lanka.
India, the world's second-largest sugar producer after Brazil, has been carefully balancing exports with domestic needs and its ethanol blending program. In the past, export controls were maintained to ensure domestic price stability and adequate stocks for ethanol blending. While India was the world's second-largest sugar exporter in the five years to 2022/23, with shipments averaging 6.8 million tons annually, a drought led to a ban on sugar exports in 2023/24, with only 1 million tons allowed to be shipped overseas last year.
The current export approval is expected to help clear excess inventories of nearly 4-5 million tonnes currently held by mills, easing storage pressure and improving cash flow in the sector. The government is also considering removing the 50% export duty on molasses, which could further encourage trade and optimize sugar byproduct utilization.
However, a Mumbai-based dealer with a global trade house noted that exporting 1.5 million tons could prove difficult for the Indian industry, given that local prices are trading at a premium to global levels. Higher exports from India could also put pressure on benchmark New York and London futures, which are currently hovering near five-year lows.
The decision to allow sugar exports marks a significant shift in India's trade strategy after last year's export restrictions. The renewed export opportunity is set to benefit farmers, sugar mills, and the broader Indian sugar industry, while reinforcing India's position as a major player in the global sugar trade. Key sugar manufacturing companies like Balrampur Chini Mills, EID Parry, Dalmia Bharat, and Shree Renuka Sugars are expected to benefit from this policy shift.
