Explained - Why Balrampur Chini, Dhampur and other sugar stocks may see a reaction today

The government on Thursday, May 14, through a notification, has amended the export policy for sugar from "restricted" to "prohibited" with immediate effect.

The export ban applies to all varieties of sugar, from raw, white and even refined. The export ban will remain in place until September 30 or until further orders. Sugar products classified under ITC (HS) codes 1701 14 90 and 1701 99 90, will also be impacted.

The ITC HS Code 1701 14 90 covers raw cane sugar, not including beet sugar in solid form, which does not contain added flavouring or colouring. Unrefined, raw cane sugar varieties, which do not fall under categories like Cane Jaggery or Khandsari sugar, fall under this code.

Processed, white refined sugar, granulated sugar, and powdered sugar, which do not contain added flavourings or colourings, and that are not sugar cubes, fall under the ITC HS Code 1701 99 90.

Exemptions To The Order

Sugar exports to the European Union and the United States, under the tariff rate quota agreements will still be allowed, provided they adhere to prescribed public notice procedures, according to the notification.

Shipments which are signed under the Advance Authorisation Scheme remain exempt from this prohibition as well.

The ban also does not apply to consignments that are already in the physical export pipeline or in transit prior to the notification being issued, including those that have been handed to customs with the electronic evidence.

In case the prohibition is not extended beyond the September 30 deadline, the policy will automatically revert to its "restricted" status.

Important Things To Note

Sugar crop for the year is now seen at 27.5 million tonnes. Out of the 15 lakh tonnes of exports allowed, around 7 lakh has already been exported.

Therefore, the impact will be felt on the balance quantity.

Sugar Stocks This Month

Over the last few weeks, sugar stocks have been in the spotlight for the rising crude prices.

Shares of Balrampur Chini are up 13% in the last one month, while those of Dhampur Sugar are up 7% during the same period. Most of the other sugar stocks have underperformed.

(With Inputs From Manisha Gupta)