India to export sugar to China

Initial contract is to despatch 50,000 tonnes to COFCO

In a boost to sugar mills sitting on surplus stocks, India will start raw sugar exports to China in early 2019, and is in talks to finalise exports to Indonesia and Malaysia as well.

In a statement on Thursday, the Commerce Ministry said the first contract to export 50,000 tonnes of sugar had been entered into by the Indian Sugar Mills Association (ISMA) and Chinese public sector company COFCO.

ISMA initially denied there was any contract to export sugar to China, then reversed its position and said it is making all efforts to export maximum possible sugar to China, but still denied any direct contract between ISMA and COFCO.

Government and sugar industry officials have been engaged in negotiations with Chinese government officials and companies for several months, according to the Ministry.

A senior official told The Hindu that the decision to export sugar to China had been taken “at the highest level.” When Prime Minister Narendra Modi met Chinese President Xi Jinping in April, they had committed to a volume of sugar exports of about two million tonnes, said the official.

“Raw sugar is the second product after non-basmati rice that China will import from India,” said the Ministry. “It is a move to reduce the $60 billion trade deficit that China has with India. India’s exports to China in 2017-18 amounted to $33 billion while imports from China stood at $76.2 billion.”

The Ministry official said government delegations were also travelling to Malaysia and Indonesia next week, for talks to finalise sugar exports to those countries as well.

India is the world’s largest sugar producer with a production of 32 million tonnes in 2018. However, domestic consumption is only around 25 million tonnes, sugar producers have been left with large surplus stocks, driving down prices and affecting both mills and sugarcane farmers.

Both government and industry have been making efforts to increase exports in a bid to reduce surplus stocks. In June 2018, the Indian embassy in Beijing hosted a seminar pitching sugar exports, with 25 Chinese companies in attendance, including COFCO Sugar. Representatives from industry lobbyist ISMA had made presentations to promote the Indian pitch.

However, in an initial response to the Ministry statement, ISMA had denied any such talks or export contracts. Later, ISMA sources told The Hindu that “COFCO is a global trading house which can sell the sugar anywhere in the world; we don’t call it export to China.”

ISMA DG Abinash Verma later clarified that ISMA is an association which does not directly enter into commercial contracts; any such contract would have been signed by its members.

Finally, in an official statement, ISMA said it is “making all efforts to export maximum possible sugar to China. We have had discussions with some of them. The Govt. of India is also taking all initiatives to help the Indian mills and exporters smoothly export sugar to China.”

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