Iran and Indonesia imported 1.2 mt of sugar from India
After setting a new record in exports, sugar companies are now looking to the government for the release of ₹5,600 crore in promised export subsidy as of August-end. The dues are in addition to the ₹2,500 crore in receivables from the government towards buffer stock and interest subvention schemes.
Despite Covid pangs, exports from India had touched a new high of 5.5 million tonne (mt) till August, against 3.8 mt logged in the same period last year. The previous highest export of 4.9 mt was logged in the sugar season (October to September) of 2008. The increase was also supported by the depreciation of the rupee.
Overseas demand
Large sugar companies such as Balrampur Chini Mills and Dalmia Bharat Sugar and Industries made the most of the surge in overseas demand on the back of lower production in Thailand, Indonesia and Malaysia.
This apart, exports to Iran also increased to a 15-year high. Iran and Indonesia together imported the highest quantity of 1.2 mt of sugar, said an India Ratings and Research report.
However, exports could come under pressure the next season with production in Brazil bouncing back, the report added.
The government is expected to retain export subsidiary due to the prevalent oversupply in the domestic market and the unviability of exports in the absence of a subsidy. However, in view of the Covid-led stretch in government finances, the admissible quantity and the subsidy rate are unlikely to be increased from the existing levels of 6 mt and ₹10.4/kg, respectively.
Oversupply to continue
While the 18 per cent decline in sugar production to 27.2 mt this season is likely to reduce the closing stock to 11.5 mt (14.3 mt), it would still remain almost twice the normal carry-forward requirement.
India Rating expects sugar production to increase to 30 mt this season. Sugar volumes are likely to have been back to near-normal in the second-half of this fiscal, which would limit the decline to about 3 per cent in FY21.