Shares of sugar companies witnessed sharp selling pressure on Thursday, in an otherwise positive broader market, after India imposed a ban on sugar exports. The sugar stocks saw broad-based selling amid concerns over lower export opportunities and weakening profitability for domestic sugar mills.

Among the major laggards, shares of Dhampur Sugar Mills plunged more than 5% in the first hour of trade so far, emerging as the worst-performing sugar stock. Uttam Sugar Mills and Sakthi Sugars also declined nearly 4-5%, while Balrampur Chini Mills slipped over 3%.

Selling pressure was visible across the broader sugar pack as well. Shares of Bajaj Hindusthan Sugar, Dwarikesh Sugar Industries, Magadh Sugar & Energy, Mawana Sugars and Triveni Engineering & Industries fell between 2% and 4% in intraday trade.

Other listed sugar firms, including EID Parry India, Avadh Sugar & Energy, Dalmia Bharat Sugar and Industries and Shree Renuka Sugars, also traded in the red amid fears that export restrictions could impact industry revenues and inventory management.

The decline in sugar stocks came despite gains in benchmark indices. The BSE Sensex and the NSE Nifty 50 were trading marginally higher, paring most of early gains.

Why did the government ban sugar exports?

India on Wednesday banned the export of raw sugar, white sugar and refined sugar, with immediate effect till September 30, 2026, or until further orders, according to notification issued by the Directorate General of Foreign Trade under the Ministry of Commerce and Industry.

The government, however, has said that the prohibition will not apply to sugar exports to the European Union and the United States under CXL and tariff rate quota (TRQ) arrangements. Exports under the advance authorization scheme (AAS) will also continue under the existing provisions of the foreign trade policy and handbook of procedures.

The move comes amid concerns over domestic sugar availability and price stability, with the government prioritising local supply and food security.

India, the world’s second-largest sugar producer after Brazil, is now projected to witness sugar output falling short of domestic demand for the second consecutive year, primarily due to lower cane yields in major producing states such as Maharashtra and Karnataka. Earlier, India had permitted sugar mills to export up to 1.59 million metric tonnes.

According to market analysts, the export restriction could result in higher domestic sugar availability, potentially weighing on local sugar prices and reducing realisations for sugar mills.

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