The government has banned sugar exports with immediate effect until September 30, 2026, according to a notification dated May 13 from the Directorate General of Foreign Trade (DGFT). The order moves sugar exports from the restricted to prohibited category, effectively stopping fresh exports except for specific categories. As per the DGFT notification, the move is aimed at stabilising domestic prices and protecting domestic supply amid fragile production growth and rising global competition from exporters like Brazil and Thailand. The policy amendment states that the export policy for Sugar (Raw Sugar, White Sugar and Refined Sugar) is amended from 'Restricted' to 'Prohibited' with immediate effect till September 30, 2026, or until further orders, whichever is earlier. The ban will not apply to exports to the European Union and the United States under existing quota arrangements, with shipments where loading began before May 13 or consignments already handed over to customs authorities being allowed. Latest reports confirm the government's decision aims to ensure sufficient stock remains available in the local market amid concerns over shortages and increasing demand.
The export ban stems from lower-than-anticipated sugar production in key states, particularly Maharashtra and Uttar Pradesh, due to weather-related abnormalities and lower yields. According to Indian Sugar & Bio-energy Manufacturers Association (Isma) Director General Deepak Ballani, the Food Ministry had initially allowed 1.5 million tonnes of exports in November 2025 and opened an additional 500,000 tonnes pool in February 2026. However, actual production fell short of estimates, prompting the precautionary approach. For the 2025-26 sugar marketing year (October to September), the Food Ministry initially allowed 15 lakh tonnes in exports, then opened an additional 5,00,000-tonnes pool, of which only 87,587 tonnes were approved. So, nearly 16 lakh tonnes of sugar export were allowed, but the food ministry and sugar mills were expecting only 7.5-8 lakh tonnes of shipments in the entire 2025-26 marketing year. The move is expected to tighten global supply and push sugar prices higher amid global uncertainty linked to the West Asia conflict and fears of weak rains due to El Nino.
Despite the export ban, India's sugar season remains broadly balanced with adequate closing stocks expected. As reported by Isma, India's estimated closing stock of the last sugar season was around 3.9 million tonnes (before ethanol diversion), with sugar production rising 7.32% to 27.52 million tonnes till April in the 2025-26 marketing season. However, an industry insider suggests the closing stock could be around 4 million tonnes, which may be insufficient to meet demand. Industry estimates peg India's 2025-26 sugar production at around 275 lakh tonnes against domestic demand of 280 lakh tonnes, raising concerns over dwindling stocks. According to reports, domestic sugar production has crossed 27.5 million tonnes this season, with total output pegged at 28.2 million tonnes, slightly higher than 26.1 million tonnes in 2024-25. However, lower production expectations and ethanol diversion have tightened the surplus available for exports.
The ban includes specific exemptions for sugar exports to the European Union and United States under CXL and Tariff Rate Quota arrangements, respectively, as well as shipments under advance authorisation scheme, government-to-government exports, and consignments already in the physical export pipeline. According to Isma, approximately 650,000 tonnes of sugar exports have already been physically completed, while an estimated 40,000–60,000 tonnes are in the physical export pipeline. The DGFT's order is also not applicable to the shipments under the advance authorisation scheme, government-to-government exports and consignments already in the physical export pipeline. The government's priority appears to be preventing domestic price increases and ensuring adequate stocks before the next season begins. As per the DGFT notification, outbound shipments will still be allowed if loading commenced before the amendment or where shipping bills were filed before the notification, with consignments handed over to customs before the notification being cleared. Exports may also be permitted under government-to-government arrangements to meet food security needs of other countries.
The decision is expected to benefit FMCG, beverage, confectionery, and pharmaceutical industries by preventing sharp rises in input costs and ensuring greater domestic availability of sugar. According to reports, India exported sugar worth $1.9 billion in FY25, with top export markets including South Asian and African nations like Sri Lanka, Libya, Bangladesh, and Sudan. The move is also viewed as a measure to build stock buffers, as the next season's crop remains vulnerable to weak monsoon conditions linked to El Nino and fertiliser supply disruptions. The key factor to watch will be India's closing sugar balance on September 30, 2026, along with progress of the next monsoon and cane availability for the upcoming crushing season. The world's second-largest sugar producer keeps exports under government control through quotas distributed proportionally among mills, with the export ban likely to support global white and raw sugar prices.
