Sources: India will extend the sugar export ban in order to boost local supplies and ethanol production.

Sources in the Indian government said that India will extend its ban on sugar exports to the second consecutive year, as it struggles with the prospect of lower cane production.

Sources with direct knowledge of this matter said that New Delhi plans to increase the price at which oil firms buy ethanol (biofuel) from sugar mills in order to boost the supply of biofuel. The sources did not want to be named as the deliberations weren't public.

India's absence on the global market will further reduce supplies and push up prices in New York, London, and other benchmark cities.

New Delhi intends to ban mills from exporting the sweetener when Brazil, the top producer and supplier in the world, is expected to reduce its supply due to a drought.

One of the sources from the government said, "There is no room for sugar exports in the current crop scenario."

We need more cane in order to achieve our ethanol blend targets.

India wants to reduce carbon emissions by increasing the percentage of ethanol in gasoline from 13%-14% to 20% between 2025 and 2026.

In the past few years, Indian sugar mills like E.I.D.-Parry and Balrampur Chini Mills have increased their capacity to produce ethanol.

Sources said that the government also considers an increase of more than 5% in ethanol purchase price for the new marketing period beginning November.

A government order issued late last month stated that India would permit sugar mills to begin producing ethanol in November using cane syrup or juice.

India's plans for extending a sugar export ban and raising domestic ethanol prices were not previously reported. Both measures will likely be announced in the next few weeks.

A government spokesperson did not respond immediately to a comment request.

India, the second largest sugar producer in the world after Brazil, has banned mills from importing the sweetener for the current season, which began Oct. 1, 2023. This was the first time that sugar exports were restricted in seven years.

New Delhi has allowed mills to only export 6.1 million tons of sugar in the last season. This is nearly half the total shipment of 2021-22.

Sources said that the impact of the patchy rains last year in Maharashtra, Karnataka and other states will likely cause the sugar output to drop to 32 million metric tonnes from the 34 million tons this year.

In 2025, the world will require shipments from India as Brazil's expected production will be lower. "Global prices will continue to rise without Indian exports," said a Mumbai-based trader with a global trading house.

(source: Reuters)