India is preparing to open its market to imported sugar

India is considering reducing or even scrapping its 100% import duty on sugar to boost domestic supplies and curb record-high prices. The country, the world’s second-largest sugar producer, typically imports very little sugar for domestic consumption.

If the duty is reduced, India could import up to 500 thsd tons of sugar by November. The country last imported significant volumes for domestic consumption in 2017/18, meaning its return to the import market could represent a notable shift for global sugar trade.

The potential need for imports is being driven by record domestic prices and concerns over the upcoming crop. Monsoon rainfall was more than 40% below normal toward the end of June and remains 13% below normal. As of August 14, sugarcane had been planted on 5.83 mln ha, slightly below last year’s level.

Sugar prices in Maharashtra recently reached an all-time high of around 46 rupees/kg. Additional pressure could come from the seasonal increase in consumption, which typically runs from late August through January as India’s festival season boosts demand.

India’s potential return to the global market as an importer comes as sugar supplies are tightening. Concerns that El Niño could reduce crops across Asia are already supporting global prices, while additional demand from India could further tighten the global sugar balance.

Tags: sugar, India, duty, imports