India is poised to grant permission for the export of 1 million metric tons of sugar during the 2024-25 marketing season, according to government and industry sources as quoted by media reports. This decision comes as a response to a surplus of sugar in the domestic market and is expected to help sugar mills manage excess stocks while providing support to struggling local prices.

The Indian government is expected to issue an official order shortly to allow mills to export the sugar. The move, while anticipated in some circles, has come as a surprise to others, particularly as this year’s sugar production is forecast to fall below national consumption for the first time in eight years.

India is the world's second-largest sugar producer, and its decision to export sugar could have significant implications for global sugar prices, particularly as India has historically been a major player in the global market. The export of 1 million tons, while relatively small compared to the nation's typical export volumes, could exert further downward pressure on global sugar prices that have already been fluctuating due to supply concerns.

The decision comes amid a tough season for sugar production in India, with key producing states such as Maharashtra, Karnataka, and Uttar Pradesh reporting lower-than-expected cane yields. These three states together account for more than 80% of the country’s sugar output. Leading trade houses have reduced their production estimates for the 2024-25 season, projecting a drop in output to approximately 27 million tons, down from 32 million tons the previous year. India’s annual consumption is expected to surpass 29 million tons, leaving a shortfall in domestic supply.

The government’s decision to allow exports is being hailed as a vital step to assist sugar mills grappling with low local prices. As of now, sugar prices in India are hovering at their lowest level in a year and a half, which has put significant financial pressure on domestic mills.

India's sugar export markets include key buyers such as Indonesia, Bangladesh, and the United Arab Emirates, with the country having been the second-largest exporter globally from 2018 to 2022, averaging 6.8 million tons annually. However, the Indian government did not allow any sugar exports in the 2023-24 marketing year, citing concerns over domestic supply and price stability.

The move to allow exports in 2024-25 signals a strategic balancing act by the Indian government, aimed at managing domestic sugar prices while also maintaining the country's position as a key global supplier. As global sugar markets remain volatile, India’s decision could have far-reaching implications for both local and international sugar dynamics.