Explained: Why Balrampur Chini, Dhampur Sugar, other stocks tumbled up to 4% on Thursday

Shares of sugar companies such as Balrampur Chini Mills and Dhampur Sugar Mills declined up to 4% on Thursday after the government changed India’s sugar export policy from “restricted” to “prohibited” with immediate effect, according to an official notification.

Following the development, Balrampur Chini Mills declined 4.5% to their day’s low of Rs 525 on the BSE, while Dhampur was down over 4% to Rs 147.55 per share. Dalmia Bharat Sugar and Industries slipped over 3% to Rs 354, while Shree Renuka and EID Parry were down over 2% each.

The restriction applies to all forms of sugar exports, including raw, white and refined sugar, and will stay in place until September 30 or until further orders. Sugar products classified under ITC (HS) codes 1701 14 90 and 1701 99 90 are also covered under the ban.

The development comes at a time when India, the world’s second-largest sugar exporter after Brazil, had permitted mills to export 1.59 million metric tonnes of sugar on expectations that production would exceed domestic demand. Now, sugar production is expected to remain below consumption for a second straight year as cane yields weaken across key producing regions.

The government said exports of both raw and white sugar would be prohibited, although shipments already in the export pipeline will be allowed under certain conditions. Consignments where loading had started before publication in the Official Gazette will still be permitted.

The notification further stated that if the prohibition is not extended beyond September 30, the export policy will automatically revert to the previous “restricted” category.

Exports to the European Union and the United States under tariff rate quota agreements will continue, subject to prescribed public notice procedures. Shipments made under the Advance Authorisation Scheme will also remain exempt from the restriction.The latest move comes a day after the government increased import duty on gold and other precious metals as part of efforts to curb non-essential imports and safeguard foreign exchange reserves. Authorities are also taking steps to ensure energy availability and maintain essential supplies in the country.

India is estimated to produce around 275 lakh tonnes of sugar in the 2025-26 season, which runs from October to September. Along with the opening stock of nearly 50 lakh tonnes, total sugar availability is expected to stand at about 325 lakh tonnes.

Domestic demand, meanwhile, is projected at around 280 lakh tonnes, leaving closing stocks at roughly 45 lakh tonnes. That would mark the lowest stock level since 2016-17, when inventories had fallen to nearly 39.4 lakh tonnes.

The government is also concerned about the next sugar season, with production in 2026-27 likely to come under pressure due to weaker rainfall linked to El Niño and possible fertiliser shortages arising from the Middle East crisis.

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