Curbs on Exports of Sugar - UPSC Current Affairs

Why in the news?

Recently, the Government of India has announced curbs on exports of sugar.

Probable Question

What are reasons for India’s booming sugar exports? Discuss the impact of curbs on sugar export.

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Key Points

• To provide required relief to consumers, customs duty and Agriculture Infrastructure Development Cess (AIDC) on 20 Lakh metric tonnes yearly import of crude soyabean and sunflower oil was exempted for two financial years (2022-23 and 2023-24).
• The exemption of import duties aims to help cool domestic prices and control inflation.

• Agriculture Infrastructure Development Cess is a kind of special-purpose tax which is levied over and above basic tax rates. 
• The purpose of the new AIDC is to raise funds to finance spending on developing agriculture infrastructure.
• The AIDC is proposed to be used to improve agricultural infrastructure. 

Why the Curb?

• These steps were taken to maintain “domestic availability and price stability of sugar”. 
• The decision was in the wake of “unprecedented growth in exports of sugar” and the need to maintain sufficient stock of sugar in the country. 
• It is for the first time in six years that the Centre is regulating sugar exports.

What are the latest curbs?

• The government has moved export of sugar from the ‘open category’, which requires no government intervention, to ‘restricted’ category, the first such move in four years.
  • This means that export of sugar is allowed only with specific permission from the Directorate of Sugar, Department of Food and Public Distribution (DFPD), Ministry of Consumer Affairs, Food & Public Distribution.
• Unlike wheat, where export has been banned, sugar would continue to be exported, but from June 1, permission would be required to send the shipments out.

Exemption

• Sugar mills and traders who have specific permissions from the government will only be able to export sugar (including raw, refined and white sugar) till 31st October 2022 or until further orders. 
• Also, the restriction is not applicable for exports to the European Union (EU) and the United States.

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Reasons for Sugar Export Boom

• India's sugar exports have increased in recent seasons as a result of Brazil producing more ethanol than sugar due to the unprecedented spike in fuel prices.
• In addition, when global food prices rose, demand for India's raw sugar climbed significantly.

Impact

• The export restrictions are likely to have a significant impact on the global sugar market given India is a major producer and second largest exporter.
• India's export limits of sugar can drive international prices higher. However, India has said that it will continue exports to vulnerable countries and neighbors.

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