India Prepares To Halt Sugar Exports, Raises Fresh Troubles For Nepal News Page
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India Prepares To Halt Sugar Exports, Raises Fresh Troubles For Nepal

Published Date: May 02, 2023

Located in Asia, India is the largest sugar exporter in the world. It exports bulk sugar to 50+ countries across the globe and favorable weather conditions, and ample rainfall leading to bumper harvests, help the Asian nation maintain its position as a reliable sugar supplier in the global market. Its neighbor Nepal, is one of the many countries that depend upon India for meeting its domestic sugar needs. Approximately 50% of Nepal’s domestic sugar needs are met via imports from India and any disruptions in Sugar sellers from the Asian nation can raise troubles for the 3 crore people of Nepal.

Although there is no official notice yet, sources believe that owing to a sudden increase in demand for sugar, India is likely to halt sugar exports and this has started raising concerns for the authorities and people of Nepal.

After Wheat and Rice, India Looking To Curb Sugar Exports

Although there has been no formal communication over restricting sugar exports, sources close to the subject matter cite that after wheat and rice, India is planning to ban sugar exports. An increase in demand for sugar amid a drop in domestic production is reasreasonugh for the government to curb sugar exports to avoid stoking inflationary pressures and creating a supply crunch on the domestic front.

However, if this happens, it will be the third commodity to be restricted for exports by the Government of India. The GOI has already banned exports of wheat and broken rice and has also imposed a 20% duty on all varieties of non-basmati rice except parboiled rice and the restriction on sugar exports will have a direct implication on major sugar importers like Nepal.

Nepal To Brace A Tough Time

Located in South Asia, Nepal primarily depends upon sugar imports from India for meeting its domestic consumption needs. Around 50% of its domestic consumption needs are sourced from India, every year and any restrictions on sugar export by India will directly impact Nepal.

Currently, the Nepal government has fixed the customs duty at 40% on sugar imports and if India imposes restrictions on sugar exports, then the sweetener will move through illegal routes into the country and this will lead to a loss of revenue for the government and high prices for the consumers. Sugar acts as a raw material for biscuit and confectionery industries and any disruptions in India’s sugar exports will also hamper these businesses to a great extent. 

The Bottom Line

Owing to low domestic production and rising demand for sugar on the domestic front, the Government of India is likely to restrict sugar exports and although there has been no official notice yet, sources close to the matter forecast the same.

This has raised concerns for Nepal as the neighboring country relies heavily on India for meeting its domestic sugar needs. In the event of a ban on sugar exports by India, the sweetener is likely to pass through illegal routes leading to a loss of revenue for the Nepal government but high prices for the domestic consumers. 

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