ISMA president Aditya Jhunjhunwala a letter to the food secretary on Friday said that based on the government's advisories, a large number of sugar mills had signed contracts for export dispatches and had applied for export visas. "Planning for raw sugar export production is done in advance based on export contracts."
They claim that shipments are the only viable option for raw sugar produced this season.
India, the world's second-largest sugar producer, exported 3.06 million tonnes of the sweetener through June 2 this fiscal year, a 53 percent increase over the previous year. The unusual surge lends credence to the government's concerns that sugar stocks could be significantly depleted by the holiday season if outbound shipments were unrestricted.
Official data show that the country, which capped sugar exports for the current marketing year through September at 10 million tonnes on May 24, has shipped far more raw sugar than refined sugar since April.
In May, it exported one million tonnes of raw sugar, far exceeding the 0.42 million tonnes of refined sugar exported. In April, it shipped 0.73 million tonnes of raw materials and 0.71 million tonnes of refined materials.
However, ISMA stated that because export orders were issued for part contracts, the restrictions would also result in complications such as litigation and hedging losses. "Furthermore, the goodwill of sugar mills as well as the country will be jeopardized if the contracts are not fulfilled."
ISMA recently revised its sugar production estimates from 35 million tonnes to 36 million tonnes, owing primarily to increased cane availability in Maharashtra, Karnataka, and Tamil Nadu.
To allay the government's fears of a sugar shortage and subsequent price increase, the letter stated that despite record exports of around 8.6 million tonnes up to the end of May, all-India average domestic ex-mill sugar prices have not risen much and are hovering around 33-34 per kg, which is still below the production cost of sugar.
