India could export 1 mln tonnes sugar as ban eased

The government permitted on Monday sugar exports by companies that had imported raw sugar with an obligation to re-export it.

Nearly 2.3 million tonnes of raw sugar were imported about two years ago, against which 1.1 million tonnes of refined sugar have been exported leaving a little over one million for re-export.

India banned sugar exports in July to rein in spiralling prices, but expectations for a bumper crop in the new season that began in October have pushed prices sharply lower.

Industry officials said the government had lifted the ban only partially to test the waters before completely removing it.

"It is a cautious approach taken by the government. But it will take at least three to four months to move out the one million tonnes left under the export obligation," said C.S. Nopany, chairman of Oudh Sugar Mills Ltd.

India's farm ministry has forecast sugar output in 2006/07 (October-September) is likely to reach 22.7 million tonnes, from 19.3 million tonnes in the last season.

India's population of more than one billion people annually consumes about 19 million tonnes of sugar.

"With exports you are adding another demand of one million tonnes, over and above the domestic demand. It will give a base to Indian domestic prices," said Ravi Gupta, president of sugar and alcohol business at Bajaj Hindusthan.

Sugar prices in the northern state of Uttar Pradesh have fallen to 16,000 rupees ($356) per tonne from 18,000 rupees per tonne during the same period last year, while in the western state of Maharashtra they have dropped to around 14,000 rupees.

G.S.C. Rao, executive director of Simbhaoli Sugar, said exports would help lift sentiment.

But S.L. Jain, director general of Indian Sugar Mills Association, said: "This is only half way."

Shares in sugar producers such as Bajaj Hindusthan , Balrampur Chini , Simbhaoli Sugars , Dhampur Sugar and Sakthi Sugars rose 6-10 percent in a weak Mumbai market. ($1 = 44.84 rupees)

Source: Reuters