However, the sudden brake on exports is likely to impact liquidity of the sugar mill owners in the short term, all of whom export through their respective quotas.
Also read: India bans sugar exports till September to stabilise domestic prices
“This decision was anticipated as the government had not approved quotas of sugar mills that were swapped with other mills or exporters,” said Praful Vithlani, chairman, Jagjivan Keshavji and Company, a sugar trading company.
The export ban could also hurt the liquidity of sugar mills in the short term just as producers face high cane payment schedules in Maharashtra and Karnataka, though overseas demand for Indian supplies surged in recent weeks.
Asian and Middle Eastern buyers increasingly shifted to India from April because longer shipping times from Brazil disrupted deliveries, helping India contract exports of about 3 lakh tonnes in the last 45 days alone, compared with 5.5 lakh tonnes shipped during October-March.
On Wednesday evening, the central government placed sugar exports under the prohibited category with immediate effect until September 30.”Exports help mills liquidate stocks and ensure timely payments to farmers. The export ban will affect the liquidity of sugar mills in Maharashtra and Karnataka,” said Atul Chaturvedi, non-executive director, Shree Renuka Sugars.
Industry observers said the ban was because sugar prices had already started inching up as sugar production for the 2025-26 season fell much short of original estimates.
Also read: India’s sugar exports to be 7.5-8 lakh tonnes in 2025-26 season on weak global prices: Official
“A sizable quantity of sugar already in transit or lying at ports may be redirected to the domestic market, likely at discounted realizations. Export advances extended by traders and exporters to mills also come under pressure as execution economics collapse overnight,” said Kapil Nema, a sugar industry expert.
Diversion of export-bound sugar to domestic markets may exert short-term pressure on prices until the supply chain and inventory pipeline absorb this disruption, said Nema, adding, “Although the ban has created a near-term oversupply psychology, the weather risks create medium-term production uncertainty.”