Move applies to raw, white and refined sugar exports, while shipments under EU-US quotas, advance authorisation scheme and existing export pipeline remain allowed

The Centre has tightened India’s sugar export regime by moving raw, white and refined sugar from “Restricted” to “Prohibited” with immediate effect until 30 September 2026, according to a notification issued by the Directorate General of Foreign Trade (DGFT). The move marks a significant tightening of supply management policy at a time of shifting production dynamics.

The restriction applies to exports under ITC (HS) Codes 1701 14 90 and 1701 99 90, though the framework retains narrow exemptions for EU and US quota-linked shipments under CXL and TRQ commitments, as well as exports under the Advance Authorisation Scheme. In parallel, the government has allowed shipments already in transit or physically committed—covering cargo loaded prior to the notification, vessels already berthed or anchored at Indian ports with rotation numbers, and consignments already handed over to customs or custodians—to proceed.

The policy also leaves limited room for government-approved exports linked to overseas food security requirements, subject to bilateral requests. Unless extended, the restriction will automatically revert to “Restricted” status after 30 September 2026.

Industry reaction has focused on both the timing and sequencing of the decision, with the Indian Sugar & Bio-energy Manufacturers Association (ISMA) framing it as a response to shifting production conditions through the current season.

ISMA Director General Deepak Ballani said exports were initially permitted in November 2025 on stronger output expectations, but that “as the season progressed, sugar production in certain key states, particularly Maharashtra and Uttar Pradesh, was impacted due to lower-than-anticipated yields coupled with weather-related abnormalities, resulting in a moderation of overall actual production.”

He added that despite this revision, the market remains broadly balanced, stating that “the current sugar season 2025–26 nevertheless remains broadly balanced, and the country is expected to maintain adequate closing stocks at the end of the season,” while estimating that about 6.5 lakh tonnes of sugar have already been physically exported and a further 40,000–60,000 tonnes remain in the export pipeline under existing contracts.

Ballani also pointed to forward-looking climatic risk, noting that “in view of the evolving domestic supply scenario and climatic uncertainties for the upcoming season 2026–27, including concerns relating to rainfall distribution during the ongoing monsoon period, ISMA acknowledges that the Government may have adopted a precautionary approach aimed at ensuring adequate domestic availability of sugar.”

However, he cautioned that the speed of implementation could create operational friction, warning that “while the industry was anticipating a calibrated review of the export situation in light of the above, the immediate nature of the present restriction may pose practical challenges in honouring certain export commitments already contracted with overseas buyers,” and adding that allowing execution of concluded contracts would help “facilitate orderly trade settlement and support the credibility of Indian suppliers in the global market.”

Behind the industry response lies a far tighter macroeconomic constraint.

As Pushan Sharma, Director at Crisil Intelligence, explains, “the ban on sugar exports is a response to tightening domestic supplies,” with prices already up about 4 per cent year-on-year and expected to remain around 5 per cent higher through SS26 as output falls to roughly 28 million tonnes—nearly 8% below earlier estimates—following weather-related disruptions in key producing states including Maharashtra and Karnataka.

Pushan highlights inventory stress as the central policy driver, noting that “with closing stocks projected at just 3.8 MMT—equivalent to 1.5 months of consumption—versus the five-year average of 2.5 months, the government’s priority is clearly to preserve domestic availability and contain prices.”

Even so, he argues that the direct export shock is structurally limited but financially meaningful at the margin, as exports account for less than 5 per cent of sales, while mills still face earnings pressure from rising cane costs, weaker distillery offtake, and subdued ethanol blending visibility, with margins expected to decline in SS26.

Taken together, the policy signals a decisive pivot toward domestic price stability and stock security, even as it introduces near-term friction in contract execution and global trade predictability.

— Suchetana Choudhury (suchetana.choudhuri@agrospectrumindia.com)