Required Report: Required - Public Distribution Date: October 04, 2023

Report Number: IN2023-0069

Report Name: Sugar Semi-annual

Country: India

Post: New Delhi

Report Category: Sugar

Prepared By: Shilpita Das, Agricultural Specialist

Approved By: Joanna Brown, Agricultural Attaché

Report Highlights:

FAS/New Delhi’s forecast for India’s centrifugal sugar production in marketing year (MY) 2023/24
(October-September) is unchanged from the previous estimate of 36 million metric tons (MMT),
equivalent to 33.6 MMT of crystal white sugar. A substantial supply of sugarcane and derivatives used
by India's booming ethanol industry could lead to a domestic supply in 2023/24 that doesn't meet
domestic consumption. Post increased India’s sugar exports for MY 2022/23 to 7.4 MMT owing to
continued favorable market prices. For the outyear sugar exports forecast is 6.5 MMT. The Indian
government may continue restricting the sugar export for the outyear 2023/24 to maintain domestic
sugar market prices, and affordability for domestic consumers.

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PRODUCTION, SUPPLY AND DISTRIBUTION
Table 1. India: Centrifugal Sugar (Raw Value Basis) (Thousand Metric Tons [TMT])
Sugar, Centrifugal 2021/2022 2022/2023 2023/2024
Market Year Begins Oct 2021 Oct 2022 Oct 2023
USDA New USDA New USDA New
India
Official Post Official Post Official Post
Beginning Stocks (1000 MT) 13213 13213 9506 9506 6506 5306
Beet Sugar Production (1000 MT) 0 0 0 0 0 0
Cane Sugar Production (1000 MT) 36880 36880 32000 32000 36000 36000
Total Sugar Production (1000 MT) 36880 36880 32000 32000 36000 36000
Raw Imports (1000 MT) 340 340 1000 800 1000 1000
Refined Imp.(Raw Val) (1000 MT) 0 0 0 0 0 0
Total Imports (1000 MT) 340 340 1000 800 1000 1000
Total Supply (1000 MT) 50433 50433 42506 42306 43506 42306
Raw Exports (1000 MT) 5779 5779 3200 3349 3300 3200
Refined Exp.(Raw Val) (1000 MT) 6148 6148 3300 4084 3700 3300
Total Exports (1000 MT) 11927 11927 6500 7433 7000 6500
Human Dom. Consumption (1000 MT) 29000 29000 29500 29567 31000 30506
Other Disappearance (1000 MT) 0 0 0 0 0 0
Total Use (1000 MT) 29000 29000 29500 29567 31000 30506
Ending Stocks (1000 MT) 9506 9506 6506 5306 5506 5300
Total Distribution (1000 MT) 50433 50433 42506 42306 43506 42306
(1000 MT)
Note: Stocks include only milled sugar, as all khandsari sugar produced is consumed within the marketing year.
Virtually no centrifugal sugar is utilized for alcohol, feed, or other non-human consumption. All figures in raw
value. To convert raw value to refined/crystal white sugar, divide by a factor of 1.07. Forecast for 2023/2024 market
years; 2021/2022 and 2022/2023 are estimates.
Source: FAS New Delhi historical data series.

Table 2. India: Sugarcane, Centrifugal, Area in Thousand Hectares and Others, TMT
Sugar Cane for Centrifugal 2021/2022 2022/2023 2023/2024

Market Year Begins Oct 2021 Oct 2022 Oct 2023

USDA USDA USDA

India New Post New Post New Post
Official Official Official

Area Planted (1000 HA) 5400 5400 5500 5400 5600 5600

Area Harvested (1000 HA) 5400 5400 5500 5500 5600 5500

Production (1000 MT) 416000 416000 413000 416000 417500 416000

Total Supply (1000 MT) 416000 416000 413000 416000 417500 416000

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Utilization for Sugar (1000 MT) 340000 340000 328000 340000 335000 331000

Utilization for Alcohol (1000 76000 76000 85000 76000 82500 85000
MT)

Total Utilization (1000 MT) 416000 416000 413000 416000 417500 416000

(1000 HA) ,(1000 MT)

Note: Virtually no cane is utilized directly for alcohol production. “Utilization for alcohol” in the table includes cane
used for gur, seed, feed, and waste. “Utilization for sugar” data includes cane used to produce mill sugar and
khandsari sugar. Forecast for 2021/2022; market years 2022/2023 and 2023/2024 are estimates.
Source: FAS New Delhi historical data series.

PRODUCTION
FAS New Delhi (Post) forecasts India’s centrifugal sugar production as unchanged at 36 million
metric tons (MMT) raw value basis for marketing year (MY) (October-September) 2023/2024.
This estimation is equivalent to 33.6 MMT of crystal white sugar1 and includes approximately
500,000 metric tons (MT) of khandsari.2 Post increased India’s sugarcane planted area for the
outyear to 5.6 million hectares (Mha) to account for expectations of a tight domestic supply
linked with India’s competing goals of maintaining affordable prices for domestic consumers and
accomplishing an ambitious sugar and molasses-based ethanol blend for the automobile industry.
Post retains the previous sugarcane production estimates for the earlier periods (Figure 1).

Figure 1. India: Sugarcane and Centrifugal Sugar Production (MMT) by Marketing Year
500
29 31 31 34 34
400 29.4
24 25.7 25.1 23.4 26.5 23.8 24.5
300 19.3

200

100

Sugarcane Production (TMT) Centrifugal Sugar (MMT)

According to post sources, early season rainfall in Maharashtra caused a drop in the amount of
sugarcane harvested; however, the acreage figure is adjusted by an increase in production in
Uttar Pradesh (Figure 2).

1
Sugar polarization factors: to convert raw value to refined/crystal white sugar, divide by a factor of 1.07.
2
Khandsari is a local type of low-recovery sugar prepared by open-pan evaporation.

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Figure 2. India: Major Sugarcane Producing States

According to the Ministry of Agriculture and Farmers Welfare’s Third Advance Estimates of
Production of Foodgrains for 2022-23, India’s total sugar production for MY 2022/2023 is
estimated to reach 494 MMT, approximately seven percent higher from the previous year and in
contrast to Post’s current year estimate which is 416 MMT (See: Ministry of Agriculture and
Farmers Welfare).

Domestic Prices
The Cabinet Committee for Economic Affairs amended its fair and remunerative price (FRP) for
sugarcane MY 2023/2024 with effect from October 1, 2023, on June 28, 2023. Based on a 10.25
percent sugar recovery rate, the FRP has been raised from INR 305 per quintal1 (USD
$3.72/quintal) to a new high of INR 315 per quintal (USD $3.84/quintal).

Furthermore, for every 0.1 percent increase in recovery over and above the 10.25 percent
standard, growers will receive a bonus of INR 3.07/quintal. The current rate is the highest ever
provided and is 100.6 percent higher than the production cost. Growers will now receive INR
291.975/quintal ($3.56/quintal) instead of the previous INR 282.13/quintal ($3.44/quintal) offer,
and there will be no deduction for sugar mills where sugar recovery is less than 9.5 percent.

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Due to excess sugar at the mills, shifting from sugar to ethanol has improved sugar mills'
financial standing by allowing them to pay farmers' cane obligations on time. The sugar industry
and sugarcane farmers have benefited greatly from the expansion of ethanol as a biofuel over the
past five years.

Table 3. India: Comparative Commodity Support Price Table, INR/MT, Wheat, and Rice
Minimum Support Price against Sugarcane SAP and FRP
Marketing Year 2017/18 2018/19 2019/20 2020/21 2021/22 2022/23
Wheat 17,350 18,400 19,250 19,750 20,150 21,250
Rice (Grade A) 15,900 17,700 18,350 18,880 19,600 20,600
Sugarcane 2,550 2,750 2,750 2,850 2,900 3,050
State Advised Price for Sugarcane, by State
Uttar Pradesh 3,150-3,250 3,150-3,250 3,150-3,250 3,150-3,250 3,400-3,500 3,400-3,500
Haryana/Punjab 2,850-3,300 2,950-3,100 3,100-3,400 3,100-3,500 3,600-3,620 3,720-3,800*
Southern States 2,300 2,750 2,750 2,850 2,900 2,900
Note: For certain southern states, sugar mills pay the FRP; Tamil Nadu abolished its previously utilized SAP in
2018. *Price revised since previous Sugar Semi-annual report; IN2022-0084.
Source: Commission for Agricultural Costs and Prices (CACP), Government of India.

State Advised Pricing (SAP)

Uttar Pradesh, Haryana, Punjab, Uttarakhand, and Karnataka employ a State Advised Price
(SAP) for sugarcane, which usually transcends the Fair and Remunerative Price. Punjab and
Haryana fixed the SAP for MY 222/23 at INR 380/quintal ($4.63/quintal) and INR 372/quintal
($4.54/quintal), respectively. Uttar Pradesh has kept the SAP at INR 350/quintal ($4.27/quintal)
for MY 2022/23. For MY 2023/24, the state to increase the SAP by INR 25/quintal
($0.3/quintal).3 Since 2019, Karnataka has not increased the SAP in recent years and remains
unchanged at INR 290/quintal ($3.53/quintal). Uttarakhand has fixed the SAP at INR 355/quintal
($4.32/quintal) for the current MY.

Cane Arrears
According to the Ministry of Consumer Affairs, Food & Public Distribution, India’s cumulative
arrears (debt) as of July 21, 2023, stood at $1.15 billion (INR 94.99 billion).4 Cane arrears differ
by states, the number of functional mills, and the average sugar recovery rate. As of July 21,
2023, Uttar Pradesh cane arrears stood at $0.77 billion (INR 63.15 billion), followed by Gujarat
$0.20 billion (INR 16.51 billion) and Maharashtra $0.08 billion (INR 6.31 billion).5

Consumption
Outyear sugar consumption is forecast at 30 MMT (equivalent to 32 MMT of crystal white
sugar), almost two percent above the current year estimate of 29.5 MMT due to domestic
demand. From August to November, the demand for sugar in the form of sweets or “mithai”

3 “Uttar Pradesh likely to increase the price of sugarcane”. CNBC; published September 4, 2023
4Source: Government of India, Ministry of Consumer Affairs, Food & Public Distribution; Press Information Bureau Release ID:
1873022
5 “UP sugar mills owe cane farmers over Rs 9,000 crore”. Times of India; published February 12, 2023.

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increases in Indian households owing to the festive season. Summer seasons in India are
prolonged and the demand for sweetened beverages ae more during that period, and the demand
is driven by heatwaves. In addition to that, there is an increasing demand for bakery and ready-
to-eat foods. However, low domestic stock and diversion of sugar for ethanol production will
impact the availability of sugar and price surge in local market. Nevertheless, despite ongoing
food price rise, the cost of sugar and processed foods has remained constant (Figure 3).

Figure 3. India: Consumer Price Index and Year-on-Year Inflation Rates on Select
Commodities (Percentage), October 2022-March 2023
300

200

100

0
Apr-23 May-23 Jun-23 Jul-23
Sugar and Confectionery Prepared meals, Consumer Food Price Index
snacks, sweets etc.

Note: Data label included for Consumer Food Price Index. Inflation rate data calculated as the average of rural and
urban markets and are calculated by on the provisional data month over same month of the previous year (Base year
2012).
Source: Ministry of Statistics and Program Implementation, Government of India.

Market Price
India is the world's largest supplier of raw sugar, and a decline in Indian raw sugar production
caused a rise in sugar prices on the global market. However, on August 4, 2023, global price of
sugar dropped after India's Food Ministry stated that the nation's sugar reserves, which stood at
10.8 MMT at the end of July, were adequate and quenched the hearsay that India could limit
sugar exports.6

The FAO Sugar Price Index averaged 146.3 points in July, 3.9 percent downwards from June,
but 29.6 percent above its level in the corresponding month previous year. The fall in world
sugar price was due to Brazil's 2023/24 good sugarcane harvest and rainfall in the sugarcane
growing areas in India.7 But the average international price of raw sugar again picked up and
reached $25.48/pound ($5,617/quintal), on September 1, 2023 (Figure 4).8

6 “Sugar Prices Fall on an Improved Supply Outlook in India”. NASDAQ, published on August 4, 2023
7 FAO Sugar Price Index

8 Other contributing factors to increased international sugar prices have included reduced sugar beet production in Europe, and
lower sugarcane output in Thailand.

Note: For market price, August 15 - Indian holiday and September 4 – American holiday

Note: Gur or jaggery is a natural derivative of sugarcane

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Figure 4. International Pricing of Raw Sugar (Cents per pound)

26
25
24
23
22

Source: International Sugar Organization

On September 5, 2023, India’s average market price of sugar across all grades totaled INR
3,725/quintal ($45.4/quintal), compared to INR 3,467/quintal ($42/quintal) previous MY. Post
estimates that low stocks, government intervention and diversion of sugar to ethanol and
beverages will further increase the market price (Figure 5).

In reaction to changes in domestic and global prices, gur prices often fluctuate along with sugar
prices, sometimes at a markup and sometimes at a lower rate. The average gur price for
September 5, 2023, has reached an all-time highest at INR 4030/quintal ($49.14/quintal).

Figure 5. April 2023, India Sugar Average Spot Price (INR per quintal)
3740
3720
3700
3680
3660
3640
3620
3600

Source: Spot Market Sugar Price.

Trade
For the current MY 2022/23, Post has revised India’s sugar export to 7 MMT, exceeding the
export cap of 6 MMT in July 2023. For the outyear, Post has forecasted India’s sugar exports to
6.5 MMT, considering the possibility that the Indian government will continue to impose export
limits to control food inflation and meet the demand for domestic consumption.9 Total exports
include approximately 3.3 MMT of raw sugar and 4.1 MMT of refined white sugar.

9 “Exclusive: India set to ban sugar exports for first time in 7 years”. Reuters, published on August 24, 2023

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For the current sugar season, The Ministry of Food and Public Distribution placed an export cap
of 6 MMT. According to sources, with the international price 50 percent more than the domestic
price, the allotment of 6.1 MMT has already been used up by Indian mills for MY 2022/23.10

For market year 2021/2022, Indonesia was the largest importer of Indian sugar, followed by
Sudan and Bangladesh (Figure 6). Post is adjusting the current trade mix between raw and
refined sugar to reflect reduced domestic sugar production and available stocks. Bangladesh (20
percent share), Iraq (10 percent), and Indonesia (9 percent) are the largest importers of Indian
raw sugar for the current MY. For refined sugar, Sudan (25 percent), Djibouti (9 percent), and
Somalia (8 percent), are the top destinations for MY 2022/23.

Figure 6. India, Sugar Exports (MT), 2020/2021, 2021/2022, and 2022/2023*

4,500,000
4,000,000
3,500,000
3,000,000
2,500,000
2,000,000
1,500,000
1,000,000
500,000
0
Bangladesh Djibouti Indonesia Saudi Somalia Sri Lanka Sudan United Rest of
Arabia Arab world
Emirates

October 2020 - September 2021 October 2021 - September 2022 October 2022 - June 2023

Source: Trade Data Monitor

Note: October 2022-June 2023 for MY 2022/2023* data. HS codes include raw sugar; 170111, 170112, 170113,
170114; and refined sugar HS codes 170191 and 170199.

Post maintains the out-year sugar import to remain flat at approximately 1.0 MMT. The Indian
government increased its import tax on raw sugar from 50% to 100% on February 6, 2018, in
order to safeguard the interests of Indian farmers and maintain domestic pricing.11
https://dfpd.gov.in/gen_policy.htmThe Advance Authorization Scheme (AAS)12 covers the
majority of India's imports of sugar, with commercial sales covering the remaining portion (see,
Directorate General of Foreign Trade).

Stocks

10
“Indian sugar mills poised for stable profits despite market volatility: Crisil Ratings”. Livemint, published July 31,
2023

Source: Department of Food and Public Distribution.

11
12
Imported raw sugar through the AAS is re-exported post refinement. The products cannot be sold in the domestic
market.

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FAS New Delhi has decreased India’s MY 2022/2023 sugar ending stocks to 5.3 MMT, from the
annual estimate of 6.5 MMT. This estimate accounts for lower opening stocks, increased
sugarcane diversion toward ethanol, and lower production in MY 2022/2023. Due to lower
production in MY 2022/23 and the E-20 target by 2025, the sugar mills will begin crushing for a
new MY with lower cane inventories for the first time ever. Outyear ending inventories are
predicted to be lower at 5.3 MMT due to the increased demand in domestic consumption and
sugarcane-derived ethanol.

National Biofuel Policy and Ethanol Blended Petrol Program

The Ethanol Blending Program (EBP), a program run by the Indian government, encourages
sugar mills and distilleries to redirect surplus sugar derivatives towards the production of
ethanol. Increased ethanol production from sugarcane, broken grains, and other feedstocks is the
program's main goal. In comparison to Indian financial year (IFY) 2021/2022, the government's
2023/24 financial assistance program to sugar mills for production of ethanol increased by 54%
(Table 3).

Table 3. Indian Government Budget Allocation-Sugar Industry (USD million/INR billion)

IFY 2021/2022 IFY 2022/2023 2023/2024

%
Allocation
Change
Realized Initial
Revised Budget Budget
Outlays Budget
Scheme for
extending
financial
assistance to sugar $36.29 million $31.43 million $48.38 million
$19.35million
mills to enhance (INR 300 (INR 259.83 (INR 400 54
(INR160 crore)
and augment crore) crore) crore)
ethanol
production
capacity
Note: Percent change depicted for IFY 2023/2024 with initial budget estimate over the IFT 2022/2023 revised
budget estimate. Source: Department of Food and Public Distribution.

To encourage increased local biofuel production, the Indian government has announced
significant changes to its 2018 National Policy on Biofuels. In order to raise India's capacity for
ethanol production from 7 billion liters (BL) in 2021 to 15 BL in 2025, the program includes a
faster national E-20 mandate from 2030 to 2025. In accordance with the EPB program for the
ethanol supply year 2022/2023 (December-November), the Ministry of Petroleum and Natural
Gas has raised the procurement costs for ethanol made from sugarcane derivatives (Table 4).1314

13 Source: Government of India, Ministry of Petroleum and Natural Gas; Press Information Bureau Release ID: 1873022.

14 “Govt said to have hiked ethanol rates fearing fall in blending as distilleries close operation”. Business Line, published August 6, 2023

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 Table 4: India: Ethanol Price by Feedstock for ESY 2021/22 and ESY 2022/23 (INR/Liter)
ESY
Feedstock ESY 2021/2022 ESY 2022/23 (Revised
2022/2023
– August 2023)
65.61
Sugarcane Juice/Sugar Syrup/Sugar 63.45 65.61
B-Heavy Molasses 59.08 60.73 60.73
C-Heavy Molasses 46.66 49.41 49.41
Damaged Food Grains / Corn (Maize) 51.55 55.54 62.39
Surplus Rice (from Food Corporation
56.87 58.50
of India) 60.29
Source: MoPNG

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