Sugar stocks reacted sharply on Wednesday after the government imposed restrictions on sugar exports from June 1, a move aimed at increasing availability of the commodity in the domestic market and curbing price rise. Reacting to the development, sugar stocks corrected up to 9% in the afternoon trade on the BSE.  

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Balrampur Chini dropped 7%, Dwarikesh sugar corrected up to 9%, Dhampur sugar and Mawana Sugar was locked in 5% lower circuit, Shree Renuka Sugar dipped nearly 6% and Eid Perry declined more than one per cent as the Directorate General of Foreign Trade (DGFT) placed export of sugar (raw, refined and white sugar) under restricted category from June 1, 2022 onwards.  

However, the government confirmed that these restrictions would not be applicable on sugar being exported to the EU and the US under CXL and TRQ. A specified amount of sugar is exported to these regions under CLX and TRQ. 

Reacting to curbs on sugar export, Zee Business Managing Editor Anil Singhvi on Wednesday said that one it will be interesting to see how it impacts the sector, but one thing is sure that prices of sugar will not increase after the government's mover. " It is altogether a different matter how much impact it has on the sector," said the Market Guru.  

He said there is also another way to contain sugar prices other than putting restrictions on the export. This can also be achieved by controlling the prices of ethanol, said Singhvi. If the government increases ethanol blending to 20% from current 10%, they can play on volume without hurting the sector.  

Earlier on Tuesday. the government said that with a view to maintain domestic availability and price stability of sugar in the country during sugar season 2021-22 (October-September), it has been decided to regulate the sugar exports with effect from June 1.  

The latest decision also comes against the backdrop of record exports of sugar. 

In sugar seasons 2017-18, 2018-19 and 2019-20, only about 6.2 LMT, 38 LMT and 59.60 LMT of sugar was exported, the statement said. 

However, in the sugar season 2020-21 against a target of 60 LMT about 70 LMT have been exported. 

In the current sugar season 2021-22, contracts for export of about 90 LMT have been signed, about 82 LMT sugar has been dispatched from sugar mills for export and about 78 LMT have been exported. 

Export of sugar in the current sugar season 2021-22 is the historically highest, the statement said.