India considers allowing some exports of raw sugar - source

By Mayank Bhardwaj and Rajendra Jadhav

NEW DELHI/MUMBAI (Reuters) - India is considering allowing mills to ship out stocks of raw sugar that have piled up in ports and warehouses, trade and government sources said on Tuesday, weeks after it imposed curbs on overseas sale of the sweetener.

Additional shipments from India, the world's biggest exporter of sugar after Brazil, could weigh on raw sugar futures, which are trading near their lowest in four months.

Last month, India capped this season's exports at 10 million tonnes, a figure they had almost reached, in a bid to prevent a surge in domestic prices as the world's second most populous nation battles high food inflation.

"We are looking into it," said a senior government official, who sought anonymity in line with official rules. "The proposal regarding raw sugar is under consideration."

He was referring to a request from sugar mills for the government to let them ship out unrefined stocks as they grapple with mounting stockpiles of the sweetener following the ceiling on exports.

A government spokesman did not immediately respond to a request for comment.

The stockpiles are estimated to run into about half a million tonnes of raw sugar, including about 200,000 tonnes stuck at ports across the country.

Trade, industry and government officials say that of India's record 10 million tonnes of sugar exports this year, raw sugar accounted for about 4.5 million, while the rest was white, or the refined variety.

Indian mills produce raw sugar only for the overseas refineries that turn 'raws' into whites.

Over the past few years, India has been exporting reasonably large quantities of raw sugar, positioning it as a consistent supplier beside key players Brazil and Thailand.

"Since raw sugar cannot be sold in the domestic market, it makes sense to export it," said Aditya Jhunjhunwala, president of the Indian Sugar Mills Association, a body of producers.

"Otherwise, the quality of our stocks might deteriorate with time."

A Mumbai-based trader said the government had already collected data from mills and exporters regarding raw sugar exports.

The sudden curb on sugar exports, and difficulties of logistics, such as a shortage of trucks and railway wagons, prevented mills from shipping out raws, a New Delhi-based trader with a global trading firm said.

"If the government allows mills to export their inventories, there will be a lot of buyers as Indian sugar is very competitive in the world market," he said.