Pakistan’s sugar industry is looking to India as a possible destination for its surplus stocks, shortly after the Indian government opened the door to duty-free sugar imports amid a sharp rise in domestic prices.
The development comes at a time when relations between India and Pakistan remain strained.
Pakistan-based newspaper The News International reported on Thursday that the country’s sugar industry has urged the government to consider exporting surplus sugar to India, citing a senior member of the Pakistan Sugar Mills Association (PSMA).
Direct trade between the two countries remains suspended following heightened political and security tensions, with the Attari-Wagah border and air routes closed. Despite this, Pakistani sugar millers see India’s decision to permit imports as a potential opportunity to reduce their excess stocks and ease financial pressure.
On August 20, the Centre allowed duty-free imports of 10 lakh metric tonnes of raw sugar under a Tariff Rate Quota (TRQ) until October 31, 2026. The Directorate General of Foreign Trade (DGFT) said the measure was intended to improve domestic availability and contain rising prices.
The move represents a notable change for India’s sugar market, which has largely remained protected from imports. Pakistan’s sugar industry is now asking its government to examine whether some of its surplus could be exported to India.
PAKISTANI SUGAR MILLS SEE AN OPENING IN INDIA
According to The News International, Ch Muhammad Waheed, a senior PSMA member representing Hunza Sugar Mills Ltd, has asked the Pakistan government to permit exports of surplus sugar to India.
Waheed said Pakistani sugar mills currently hold more than 1.2 million tonnes of surplus stock, putting pressure on the industry ahead of the next crushing season. Mills are concerned that another strong crop could further increase inventories and make it harder to finance purchases of the next sugarcane crop from farmers.
He argued that India’s geographical proximity could provide Pakistan with a freight advantage compared with more distant export markets. Exports to India, he said, could generate foreign exchange, improve mills’ liquidity, lower storage expenses and help mills make timely payments to sugarcane growers.
Waheed also suggested that sugar exports could provide a broader economic benefit by reopening at least one channel of commercial engagement between the two countries.
However, Pakistan is not currently preparing to ship sugar to India under any existing bilateral trade arrangement. Its sugar industry is only asking Islamabad to permit such exports. Any actual shipment would require government approval and a mechanism allowing trade between the two countries.
Therefore, India’s decision represents a potential opening rather than an immediate trade agreement.
THE RISING CRISIS OF SUGAR IN INDIA
India’s decision to reduce import barriers comes as sugar prices have risen significantly. Industry data showed that the nationwide average ex-mill sugar price reached around Rs 4,000-5,500 per quintal on August 18, compared with approximately Rs 3,900 a year earlier.
The government has also imposed stock-holding restrictions to curb hoarding and speculative activity. In July, the Centre said rising ex-mill prices were not entirely supported by demand and supply fundamentals and pointed to hoarding and speculative transactions as factors contributing to price volatility.
The latest decision to permit 10 lakh tonnes of duty-free raw sugar imports is aimed at boosting domestic supplies and preventing further price increases. The DGFT has also established rules for allocating the 10-lakh-tonne TRQ.
For Pakistan’s sugar industry, India’s supply shortage therefore presents an unusual potential export opportunity.
INDIA’S SUGAR CRUNCH AND THE ETHANOL ANGLE
India’s sugar-price increase has also renewed debate over how much sugarcane should be used for sugar production and how much should be diverted towards ethanol.
India has significantly expanded its ethanol programme as part of efforts to reduce crude oil imports and achieve its 20% ethanol-blending target. Sugar mills have been encouraged to divert excess sugarcane and sugar products towards ethanol, particularly during the rapid expansion of the country’s biofuel programme.
According to the Department of Food and Public Distribution, around 30-40 lakh tonnes of sugar have been diverted towards ethanol in recent sugar seasons. Ethanol production capacity had reached 1,953 crore litres by October 2025, compared with less than 200 crore litres of molasses-based capacity in 2014.
The All India Distillers’ Association estimated the country’s ethanol production capacity at around 1,822 crore litres annually across 499 facilities by mid-2025. Grain-based feedstocks, particularly maize, have become increasingly important, although sugarcane remains a significant source.
Blending ethanol with petrol helps reduce India’s reliance on imported crude oil while providing an additional source of revenue for farmers and sugar mills.
However, the impact of diversion becomes more apparent when sugar supplies tighten. When sugarcane and its derivatives are diverted towards ethanol, less of the crop is ultimately available for table sugar production. If opening stocks are low or production estimates weaken, this can contribute to tighter supplies and push prices higher.
The government, however, has offered a different explanation for the recent price pressure. It has maintained that India has sufficient sugar to meet domestic consumption and has attributed part of the volatility to hoarding, speculative transactions and abnormal stock holding by certain market participants.
Thus, ethanol diversion alone does not explain the country’s current sugar situation.
PAKISTAN’S CONCERNS OVER SURPLUS STOCKS
Pakistan’s sugar industry says it has sufficient stocks to serve additional markets but is facing its own financial and cash-flow pressures. According to The News International, mills are dealing with unsold inventory, higher input costs and the need to prepare financially for the upcoming crushing season.
Waheed warned that if existing stocks are not sold, mills could face difficulties financing the purchase of the next sugarcane crop when crushing begins in November.
The Pakistani sugar industry expects another strong sugarcane harvest next season, with sugar production estimated at around 8 million tonnes. If current inventories remain unsold, additional production could further increase pressure on mills, Waheed said.
However, trade between India and Pakistan remains severely restricted following the deterioration in bilateral relations. With conventional trade routes largely frozen, any Pakistani sugar shipment to India would require significant policy decisions from both countries.
For now, Pakistan is not exporting sugar to India. Its sugar industry is merely asking Islamabad to explore the possibility.
Nevertheless, Pakistani sugar millers looking towards India immediately after New Delhi opened a 10-lakh-tonne import window underscores the unusual market dynamics created by India’s sugar shortage.
