The Union government announced fresh measures to cool food inflation on Tuesday, including restricting sugar exports from 1 June and allowing duty-free imports of soyabean and sunflower oil.
The consumer affairs ministry said it will only allow exports of up to 10 million tonnes of sugar annually from next month. Earlier in the day, the finance ministry allowed duty-free imports of 2 million tonnes a year for crude soyabean oil and crude sunflower oil. The relief on edible oil comes into force on Wednesday and will be effective until March 2024.
“Taking into consideration the unprecedented growth in exports of sugar and the need to maintain sufficient stock of sugar in the country as well as safeguard interests of the common citizens of the country by keeping prices of sugar under check, the Centre has decided to regulate sugar exports w.e.f. 01 June," an official statement said.
India is the world’s second-largest sugar producer after Brazil, and sugar exports exceeded 10 million tonnes for the first time in FY22, up 65% compared to FY21, official data showed.
Earlier, the government had offered relief on crude palm oil and lentils to ease retail prices and imposed a ban on exporting wheat. Tuesday’s order by the finance ministry also specified the procedure to avail of the duty concession. The urgent measures come at a time food inflation in April jumped to 8.38% from 7.68% in March.
The decision to cap sugar exports instead of a ban has been made to avoid problems that traders faced at the ports when a sudden wheat export ban was announced, said Praful Vithalani, chairman of the India Sugar Trade Association (AISTA).
“AISTA had suggested to the government that the opening stock of sugar should be 6 million tonnes. Having such a stock will prevent price rise even if we don’t have a healthy monsoon," Vithalani said before the ban was formally announced.
Vithalani further said that the reason behind this step is to ensure that India has a comfortable stock on 1 October when the new season starts.
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Experts further said the price rise in sugar is not significant compared to other commodities such as wheat, where prices surged nearly 15% during the last year, and the government decided to ban exports.
“About 8.5-9 million tonnes have been contracted and about 720,000 tonnes have been shipped up to 15 May from 1 September last year. Balance 1.7-1.8 million tonnes delivery is in transit. The government is looking into the final numbers," a trader said.
Mukesh Kuvadia, general secretary of the Bombay Sugar Merchants’ Association, said: “The government wants to be on the safer side and plans to have 6 to 6.5 million tonnes opening stock."
Rituraj Baruah contributed to the story.
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