Mumbai/New Delhi: India will soon bring in rules to force sugar mills to export millions of tonnes of surplus supplies to prop up local prices, a move that could drag down global rates, which have hovered near 8-1/2 month lows.

The country is likely to produce a record 29.5 million tonnes of sugar in the 2017/18 season that ends on Sept. 30, up 45 percent from the previous year, hammering local prices down by more than 15 percent in the past six months.

The government would first scrap the 20 percent sugar export tax and then ask mills to compulsorily export 2-4 million tonnes of the sweetener to suck the extra supply out of the country, said three government sources involved in decision making.

The sources did not wish to be identified because they are not authorised to talk to media. Three industry officials also confirmed the move.

In India, the federal government fixes the price that sugar mills must pay every year to cane farmers, but some state governments invariably raise the rate to court growers, a large voting bloc.