Indian sugar industry poised to export 5 mn tonne, likely to set new record

India, the world's biggest sugar producer, is poised to break its own export record this year thanks to a flurry of overseas sales in the past few months, prompted by attractive global prices, trade and industry officials said on Tuesday.

Sugar mills in India have done deals to export 2 million tonnes in the new season that began on Oct. 1, 2019, raising hopes that the country would sell at least 5 million tonnes on the world market in the 2019/20 season, nearly a third higher than the previous year.

"Looking at the current trend, I can tell you with a lot of confidence that we'll be able to export at least 5 million tonnes this year," said a New Delhi-based dealer from the Indian unit of a global trading firm.

At 5 million tonnes, Indian exports would surpass their previous peak of 4.96 million tonnes shipped in 2007/08 according to trade and industry data. This was spurred by a rally in international prices, a weak Indian rupee and a clutch of government subsidies which made exports lucrative.

"Compared to last year, exports got the momentum this year from the start of the season due to an improvement in sugar prices," said Rahil Shaikh, managing director of MEIR Commodities India.

A sharp increase in exports from India, also the world's biggest sugar consumer, could weigh on benchmark prices in New York and London and trim the market share of rivals Brazil, Thailand and Australia, the world's top sugar suppliers.

Higher sugar shipments from India could intensify a trade dispute at the World Trade Organization (WTO).

Brazil has already said India's subsidies for sugar exports were not in line with WTO rules and would hurt free competition in the global market. Brazil, Australia and Guatemala have questioned the subsidies at the WTO.

India, struggling with surplus sugar supplies, has approved a subsidy of 10,448 rupees ($145.58) a tonne for exports in the 2019/20 season - a move that encouraged mills to clinch overseas sales deals early this year.

Traders have contracted to export raw sugar at an average $300 a tonne and white sugar $330 a tonne on a free-on-board (FOB) basis, three dealers directly involved in the deals said. They did not wish to be identified in line with their organisations' policy.

In contrast to the 2 million tonnes of exports contracted so far this year, in the first three of the 2018/19 season Indian mills were only able to sell about 850,000 tonnes of sugar.