(MENAFN- KNN India) New Delhi, Nov 6 (KNN) India may double its sugar export quota to 2 million metric tonnes in the 2025–26 season as reduced diversion of sugar for ethanol production is expected to leave a larger domestic surplus, industry officials said.

The development could add downward pressure on global sugar prices, with benchmark New York and London futures already hovering near five-year lows.

The world's second-largest sugar producer had been a leading exporter until last year, averaging 6.8 million tonnes of shipments annually between 2018–19 and 2022–23, according to ET.

However, exports were curtailed to just 1 million tonnes in 2023–24 after drought conditions led the government to impose restrictions.

“If you are talking about likely export volumes for this season, we're looking at up to 2 million tonnes of sugar going out of the country,” said Deepak Ballani, Director General, Indian Sugar & Bio-Energy Manufacturers Association (ISMA).

India's net sugar output for the 2025–26 season, which began on October 1, is estimated at 30.95 million tonnes, up 18.5 per cent from the previous year, after diverting around 3.4 million tonnes for ethanol production, according to ISMA data.

The industry had initially projected a diversion of 4.5-5 million tonnes, but only 28 per cent of the total ethanol allocation came from sugar-based feedstock, with the remainder sourced from grains and other materials.

The sugar industry has urged the government to permit exports early in the season to take advantage of a brief three-month window before Brazil's new crop hits the global market and weighs on prices, said Prakash Naiknavare, Managing Director of the National Federation of Cooperative Sugar Factories (NFCSF).
While domestic sugar prices currently remain higher than international rates, mills expect export parity by early December as fresh supplies begin to temper local markets.

Ballani noted that many mills, having expanded ethanol production capacity to meet the government's 20 per cent ethanol-blending target, are now facing underutilisation due to reduced feedstock diversion.

“Sugar mills will incur losses due to large unutilised capacity for ethanol, and they will have to produce more sugar,” he said.

Industry representatives maintain that timely government approval for sugar exports would help balance the domestic market, reduce inventory pressure, and ensure mills can maintain cash flows for cane payments during the peak crushing season.

(KNN Bureau)

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