India’s Sugar Export Ban Sparks Concern in Nepal Amidst Sufficient Stock
Nepal currently has sufficient sugar stocks despite India’s export ban, but industry leaders warn that an extended restriction could trigger shortages and disrupt food-processing industries reliant on imported sugar. Businesses are urging duty cuts on imports from alternative suppliers like Brazil and Pakistan to avoid future supply and price pressures.
India’s decision to ban sugar exports until September 30, 2026, has raised concerns in Nepal about a potential sugar shortage. Although the ministry and sugar producers’ association are trying to reassure the public about sufficient stock, industrialists and traders are worried.
They state that if India’s ban is extended, industries heavily reliant on sugar, such as juice, biscuit, and chocolate manufacturers, could face a crisis, as Nepal’s domestic production alone cannot meet market and industrial demand.
India recently announced the export ban, citing that its domestic production is insufficient to meet its own consumption needs. The ban is attributed to lower production last year and the risk of reduced output in the coming year due to ‘El Niño’ weather patterns. India’s sugar production for the 2025-26 season is estimated at 27.5 million tons, while its domestic demand is 28 million tons. This projected deficit and the lowest sugar reserves since 2016-17 have prompted India to take this step to control prices.
According to Biratnagar industrialist Sagun Bohora, India was compelled to halt sugar exports due to a significant drop in sugarcane production caused by unseasonal rains and adverse weather conditions. He believes this will have a long-term impact on Nepal.
“This year, sugarcane production in India has been low. The size of the sugarcane is also smaller compared to before. Farmers’ crops have been damaged in many places due to unseasonal rain. This is its negative impact,” he said.
No Immediate Shortage or Price Hike Expected
While India’s domestic compulsion will directly affect Nepal’s economy and industrial sector, stakeholders suggest that there is no immediate cause for panic or price hikes due to sufficient existing stock.
Rajeshwar Gyawali, joint secretary at the Ministry of Industry’s Bilateral and Regional Trade Division, stated that Nepal has enough stock to last twice the period of India’s ban, thus preventing a shortage. He added that discussions have been held with the Nepal Sugar Producers Association, which is prepared to ensure a smooth supply.
Echoing Gyawali’s sentiment, the Nepal Sugar Producers Association has assured sufficient stock and no price increase. According to the association, 13 sugar industries have operated during the current crushing season, producing approximately 190,870 metric tons of sugar. Only a negligible amount has been sold, with about 108,000 metric tons currently in stock at the industries. Traders reportedly hold an estimated 20,000 metric tons.
As of March of the current fiscal year, 61,000 metric tons of sugar and sugar products have been imported. Despite India’s export ban, industrialists believe Nepal will not face an immediate sugar shortage due to adequate stock, which they expect to maintain market stability until the Dashain festival. However, biscuit industrialist Mahesh Jaju warns of a potential shortage closer to the Dashain and festival season.
Pawan Sharda, Chairman of the Confederation of Nepalese Industries (CNI) Koshi Province, believes there is no immediate cause for alarm. “Nepal’s domestic production does not meet its total sugar requirement. The impact will be felt, but it depends on the stock. The immediate effect might not be significant as our sugar mills produce enough for 5-6 months. The impact won’t be felt for 2-3 months, but what happens after that is uncertain,” Sharda said.
Industrialist Sagun Bohora agrees. “The reason prices haven’t increased yet is that a few large sugar mills and industrialists have stocked at least 100,000-150,000 tons of sugar. Sugarcane crushing happens only for three months. They need to stock for eight to nine months from this three-month production. Nepalese industrialists currently have sufficient sugar stock. Prices are unlikely to fluctuate significantly until Dashain,” Bohora stated.
Rajendra Raut, Chairman of the Federation of Nepalese Chambers of Commerce and Industry (FNCCI) Koshi Province, also citing the Sugar Producers Association, believes there is no immediate crisis. “Based on the statement from the Sugar Producers Association, the market demand can be met. With new production (crushing) expected in the next 4 to 5 months, there won’t be a sugar problem,” President Raut said.
Shortage Possible if Ban Extends
While a shortage is unlikely with India’s current four-month ban, the possibility arises if the ban is prolonged. An extended ban could lead to dwindling stocks and a tendency for hoarding by businesses and individuals, increasing the likelihood of a shortage.
Industrialist Mahesh Jaju predicts a shortage would begin six months after the ban is imposed. He warns this would impact industries that use sugar as a primary raw material, such as juice, biscuit, confectionery, and chocolate manufacturers.
Rajendra Raut of FNCCI Koshi Province believes that importing sugar is the only option, as Nepal’s domestic production cannot sustain the industries. “Nepal’s demand is around 250,000 tons, with only 150,000 tons produced domestically. The remaining 100,000 tons must be imported. Even if domestic production were sufficient, it wouldn’t fully meet the needs of the industries. If the ban is extended, it could significantly impact production,” Raut said.
However, India has maintained provisions to allow exports to countries like Nepal amidst the ban. The fifth point of the notification issued by India’s Directorate General of Foreign Trade, Lav Agarwal, states, “The Government of India may permit export to other countries to meet their food security needs and on the basis of requests from their governments.”
Historically, India has allowed exports to Nepal during ban periods, such as for wheat and onions. Joint Secretary Gyawali of the ministry believes that even if the ban is extended, imports to Nepal are possible through bilateral dialogue.
Third Countries Could Be an Alternative if Customs Duty is Reduced
If sugar cannot be imported from India, there is a possibility of importing from third countries like Brazil and Pakistan, which have significant sugarcane production. However, industrialists point out that high customs duties and transportation costs for imports from third countries would make sugar prohibitively expensive.
Industrialist Bohora explains that the absence of South Asian Free Trade Area (SAFTA) benefits makes third-country sugar more expensive. “Sugar from Brazil is not viable now because importing under SAFTA offers a 10% advantage. Importing sugar from Brazil and Pakistan incurs a 40% duty, while India’s duty is 30%,” he said. “This 10% duty difference is substantial for large consignments.”
CNI Chairman Sharda shares similar views. He states that increased international shipping costs and high government customs duties make imports difficult unless reduced. “The government must reduce the duty; only then will importing from abroad be beneficial. We need to act promptly. What is the price in the international market? During this war, many ships cannot travel through many areas. Shipping costs have also increased significantly. The prices of some goods have risen,” he said.
He urges the government to facilitate sugar imports from third countries before a crisis emerges and to reduce customs duties immediately. Given that imports from third countries take months, policy decisions are needed now, they argue.
FNCCI Chairman Rajendra Raut also believes that reducing customs duty is the only way to save industries. “It is not possible to operate and sustain industries by purchasing only domestically produced sugar. Therefore, for imports from third countries, customs duty must be subsidized for a certain period,” Raut said. “With customs concessions, industries can be sustained. If this process is not followed, industries may have to shut down or operate only part-time.”
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Source : Ratopati
