India Likely To Ban Sugar Exports For First Time In 7 Years: Report

India is likely to ban mills from exporting sugar in the next season starting October, halting shipments for the first time in seven years, as inadequate rain has cut cane yields, said a Reuters report citing three government sources.

India's absence from the world market would be likely to raise benchmark prices in New York and London that are already trading at almost multi-year highs, triggering concerns of further inflation on global food markets.

"Our primary focus is to fulfil local sugar requirements and produce ethanol from surplus sugarcane," said a government source on condition of anonymity. "For the upcoming season, we will not have enough sugar to allocate for export quotas."

India permitted mills to export only 6.1 million tonnes of sugar during the current season to September 30, after allowing them to sell a record 11.1 million tonnes last season.

In 2016, India levied a 20% tax on sugar exports to restrict overseas sales.

Monsoon rains in the top cane-growing districts of the western state of Maharashtra and the southern state of Karnataka - which together account for over half of India's total sugar production - have been as much as 50% below average so far this year, according to the weather department data.

Patchy rains would cut sugar output in the 2023/24 season and even reduce planting for the 2024/25 season, an industry official, who declined to be named, said.

Local sugar prices climbed this week to their highest level in almost two years, prompting the government to allow mills to sell an additional 200,000 tonnes in August.

Retail inflation in India rose to a 15-month high of 7.44% in July and food inflation to 11.5% - its highest in over three years.

India's sugar production could decline 3.3% to 31.7 million tonnes in the 2023/24 season.

India surprised buyers last month by levying a ban on non-basmati white rice exports. New Delhi also imposed a 40% duty last week on exports of onions in an effort to cool down food prices ahead of state elections later this year.