India is currently the world’s largest consumer and the second largest producer of sugar. In the past, the national sugar balance regularly moved from surplus to deficit and back. This resulted in huge swings in India’s position on the world sugar map. However, since 2010/11 the country’s sugar balance has shown an excess of production over domestic demand, season after season. With a partial liberalization of the sugar market in 2013 and remunerative levels of guaranteed cane prices, the notorious India’s sugar cycle has significantly changed, if not disappeared. In this new study the ISO Secretariat takes a closer look at major drivers in sugar production and consumption and their prospects over the medium to longer term. A key issue addressed by the paper is the likelihood of the return of the sugar cycle. After examining the current situation with sugar cane and sugar production, as well as sweetener demand, the ISO suggests that huge year-on-year drops in production below the level of domestic consumption are unlikely, at least in the coming three to five years assuming normal weather conditions. Even in the longer turn, the country’s sugar balance may still hover around a 1 mln tonne surplus. The surplus character of the balance may be, however, altered by difficult-to-predict changes in the government sugar policy or a significant increase in cane use for ethanol production.
Introduction I. Modification in Production Cycle II. Sugar Sector – Drivers and Outlook Cane Cultivation Cane Pricing Monsoons and Cane Production Stability in Cane Production Outlook Sugar Industry General Overview Refining of Imported Raw Sugar Update for 2014/15, Prospects for 2015/16 Outlook III. Regulatory Environment Box 1 Primer of India’s Sugar Policy prior to 2013 Rangarajan Committee Report Partial Liberalization of Sugar Market in 2013 IV. Sweetener Demand V. Sugar Foreign Trade VI. Diversification in the Sugar Industry Fuel Ethanol Bagasse-based Cogeneration Conclusions – Sugar Industry beyond 2015/16