India: India needs urgent support for sugar mills to develop ethanol

With global sugar prices falling, speculators are forecasting a further drop to 8 cents a pound (about 0.45 kg) in 2018-19. They blame India for shipping an additional 6 million metric tons (MT) of sugar globally. However, India’s domestic sugar millers will continue to struggle for profits as the expected increase in export will not be enough to offset the additional 10 million MT of sugar produced in 2017-18 over the previous year.

Based on last year’s ‘fair and remunerative’ cane price of Rs 255 a quintal (100 kg), and sugar recovery rate of 10.77%, the Indian Sugar Mills Association estimated that at this cane price, mill owners at the aggregate level will be facing a deficit of Rs 6,800 crore. Exporting surplus sugar to deficit regions of the world could be an option.

In anticipation of future growth in the export market for sugar, GoI took specific measures: such as increasing customs duties on sugar import from 50% to 100%, and zero tariffs on sugar exports. GoI is also negotiating sugar export to China, which could help sugar exports to go up to 1.5 million MT even with the existing 50% import tariff imposed by the Chinese government.