The world may be short sugar, but India isn’t about to loan its out. While the country will produce 25 million tons of sugar in 2011, with a 1.5 million ton surplus, the government will only allow 500,000 tons of sugar to be exported, according to MoneyControl.com.With floods destroying crops in Thailand and Australia, only Brazil has been left to make up the difference. Sugar prices jumped 28% in 2010 according to Bloomberg and companies are increasingly opting for sugar substitutes.
Indian sugar mills have been allowed to export a limited amount to benefit from inflated prices. Local mills however are only allowed to export raw, refined and white sugar after they have met domestic supplies, according to The Hindu.
The Indian government is keeping its own inventory in mind is limiting exports. The government is also levying a stiff 60% tax on imports.
There may be some hope for the market to open further in the future, however, with the government asking sugar mills across the country to register for the Open General licence (OGL) to increase transparency and and, potentially, deregulation.