The Union government has banned sugar exports until September 30, 2026, with immediate effect, according to a notification from the directorate general of foreign trade (DGFT) dated May 13. This represents a significant escalation from the previous restricted export category, where licences were required for outbound shipments. The new policy applies to all categories of sugar including raw sugar, white sugar and refined sugar. As per Firstpost, the government has changed sugar exports from "restricted" to "prohibited" in a move aimed at stabilising domestic prices amid tightening supply conditions. The decision has come into immediate effect and was taken to maintain adequate sugar supply in the domestic market and control rising prices. The ban is particularly significant given India's position as the world's second-largest sugar producer, making this a strategic decision to prioritise domestic stability over export earnings.
India's sugar production has faced significant challenges, with production rising 7.32% to 27.52 million tonnes till April in the 2025-26 marketing season, driven by higher output in Maharashtra and Karnataka, according to industry body ISMA. However, production is now estimated at 28 million metric tonnes, about 8% lower compared with 30.5 MMT expected earlier, as unseasonal showers in October 2025 triggered flowering of sugarcane and lowered recovery rates in Maharashtra and Karnataka. Closing stocks are projected at just 3.8 MMT—equivalent to 1.5 months of consumption—versus the five-year average of 2.5 months. ISMA has projected total production for the 2025-26 marketing season at 29.3 million tonnes after ethanol diversion, up from 26.12 million tonnes recorded in 2024-25. The production challenges are compounded by El Niño risk, weak monsoon concerns, pressure on sugarcane production and low buffer stock, making the situation particularly sensitive for the government.
For the 2025-26 sugar marketing year (October to September), the government initially allocated 15 lakh tonnes for exports and subsequently opened an additional 5 lakh-tonne pool. However, only 87,587 tonnes were approved from this expanded quota, as reported by the DGFT notification. This limited utilisation of export quotas reflects the challenging supply conditions that prompted the government to implement the complete export ban. The food ministry and sugar mills were expecting 7.5-8 lakh tonnes of shipments in the entire 2025-26 marketing year, with nearly 16 lakh tonnes of sugar export allowed under the previous policy framework. The government's decision to prioritise domestic supply over export earnings becomes more strategic when considering that sugar is used in sweets, bakery items, cold drinks and packaged foods beyond just tea, making it essential for consumer goods production.
The export ban is closely linked to India's ethanol blending policy, where the government has decided to blend 25% ethanol with petrol to reduce dependence on imported oil and manage fuel supply shortages during the crisis. As per social media reports, this represents a fourth reason for the sugar export restriction, as sugarcane is used for ethanol production. The government's focus on domestic stability over export earnings becomes particularly relevant when considering the dual use of sugar in both food and fuel sectors. The policy change aims to ensure adequate domestic supply of both sugar and ethanol, with the government's priority clearly to preserve domestic availability and contain prices across multiple sectors.
The export ban excludes sugar shipments to the European Union and the US under CXL and Tariff Rate Quota (TRQ) arrangements. These arrangements allow exporters to ship specified quantities at significantly reduced or zero customs duties. The policy also exempts shipments under the advance authorisation scheme, government-to-government exports and consignments already in the physical export pipeline. Domestic sugar prices have risen about 4% year-on-year between October 2025 and April 2026 and are expected to be overall about 5% higher for sugar season 2026, according to Crisil Intelligence. The ban is expected to have limited impact on millers, as exports have accounted for less than 5% of sales over the past two years.
