Cap on sugar exports

After the ban on wheat exports, the cap on sugar exports comes on the back of a series of measures, including the cut in duties on fuel to arrest the shooting inflation and safeguard stocks for domestic consumption. Amid the global supply volatilities caused by the Russia-Ukraine conflict, pragmatic protectionism appears a safe bet in the short run. India has been the biggest producer and second largest exporter of sugar in the current year. The record global sales have prompted restrictions for the first time in six years to ensure there is no shortage that could lead to the government ending up buying expensive sugar in future to meet the demand at home. Exports will be limited to 10 million tonnes till the end of the season in October.

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Ukraine and Russia accounted for a third of global wheat and barley exports before the war but since the invasion on February 24, Ukraine’s ports have been blocked and grain silos destroyed. Global wheat prices have gone up by more than 40 per cent beginning January, and confronted with stunted growth because of the severe heatwave. New Delhi, despite fierce criticism by the West, chose own consumer interests above any other consideration when it took a sudden U-turn and put an end to wheat exports. The decision on sugar exports follows the same trajectory, though a cap and not an outright ban with immediate effect reflects the lessons learnt to avoid the problems faced by wheat traders.

With food inflation in April jumping to 8.38 per cent from 7.68 per cent in March, the announcement of duty-free import of crude soyabean and sunflower oil until 2024 follows similar relief on crude palm oil and lentils to ease retail prices. Geopolitical tensions, it appears, are unlikely to subside soon, so increased prices, aggravated by high energy costs and supply-side bottlenecks, could be here to stay. Easing the pain in whatever manner should drive policy.