The export permissions were granted even though, according to traders, there is no parity between domestic prices and global rates for both wheat and sugar. An official statement said the calibrated decisions to allow exports were taken after a comprehensive assessment of current availability and price conditions, reaffirming the Centre’s commitment to protecting farmers’ interests and managing surpluses.
In the case of wheat, the export ban was imposed on May 13, 2022, when domestic prices had surged amid a spike in demand for Indian wheat following the Russia-Ukraine war and a decline in local production. The surge in exports had not only driven up domestic wheat prices but also threatened to disrupt the government’s annual procurement for the public distribution system, prompting the ban.
Now, with wheat production expected to reach new highs in the 2026-27 marketing season beginning in April, and with both traders and the government holding substantial stockpiles, the Centre has decided to lift the ban. India produced a record near-118 mt of wheat in the 2025-26 crop marketing season. Closing stocks of wheat in the central pool as of March 31, 2026, are officially projected at around 18.2 mt, compared with a buffer requirement of 7.5 mt, roughly 143 per cent more. Trade sources, however, estimate stocks could be closer to 20 mt. An official statement also noted that private traders were holding sizeable wheat inventories estimated at around 7.5 mt, nearly 3.2 mt higher than during the corresponding period last year. Taken together, these factors indicate that India’s wheat market is amply supplied, a situation expected to persist in the 2026-27 season as well.
In such a scenario, a sharp decline in prices would have been likely as the new crop enters the market. Indian wheat is currently priced at about $270–280 per tonne (free on board, FOB), compared with global prices ranging between $197 per tonne and $265-270 per tonne. This disparity leaves Indian wheat uncompetitive in international markets. Trade sources said domestic prices would need to fall to roughly ₹2,250-2,300 per quintal before Indian wheat becomes viable for export. “Our assessment is that when prices move closer to $260-265 per tonne sometime in April, then 60,000-65,000 tonnes of Indian wheat could be exported to neighbouring Bangladesh per month between April-June by road from states such as Bihar or UP,” said a senior executive at a global trading firm.
Some market participants said traders are unlikely to pay more than ₹2,300 per quintal for the next crop after suffering losses this season. “Untimely release of wheat from central pool stocks into open markets during the current financial year has resulted in heavy losses for many traders. As a result, they may be unwilling to pay more than ₹2,250-2,300 per quintal to farmers next season,” another trading executive said. He added that central pool procurement in FY27 could reach 30-32 mt. In FY26, India procured around 30 mt of wheat, the most since 2021-22. If procurement exceeds 30 mt in FY27, combined with opening stocks of about 20 mt, total availability could approach 50 mt.
The public distribution system requirement for FY27 is estimated at around 22 mt, while the closing buffer requirement stands at 7.5 mt. “This implies a potential surplus of nearly 20 mt of wheat in FY27, for which the government must make arrangements. Allowing exports is the first step in that direction,” the trade official said.
A steep fall in wheat prices could have significant economic consequences, including higher subsidy burdens, as well as political ramifications.
Traders said wheat exports in the coming months would likely originate largely from UP and MP.
UP faces local body and state elections in the months ahead, while in MP, soybean farmers have voiced concerns over declining prices following the India-US trade deal. Further pressure on farm incomes could complicate the political landscape.
Some reports indicate soybean and corn prices in India have softened by between 4 per cent and 10 per cent since the interim trade framework was announced on February 7. “In UP, farmers depend heavily on private traders. By opening exports, the government has effectively sought to prevent prices from falling below roughly ₹2,300 per quintal,” a trader said.
In sugar, traders said the decision to allow additional exports of 0.5 mt, even as the industry struggles to meet the earlier quota, appears aimed more at improving sentiment and preventing a buildup of sugarcane payment arrears.
As with wheat, domestic sugar prices remain above international levels, rendering Indian sugar uncompetitive. Indian sugar is quoted globally at around $450 per tonne (FOB), compared with about $400 per tonne for supplies from other origins. Here, too, traders said the policy move appears intended to support domestic prices and avert a surge in sugarcane arrears, which could carry political implications, particularly in western UP and Maharashtra.
An excessive accumulation of arrears would weigh on farmers and could become a flash point for opposition parties. “The impact is already visible. Between last Friday and today, average ex-factory sugar prices have risen from around ₹3,700 per quintal to ₹3,725 per quintal, an increase of ₹25-40 within days,” a senior sugar industry executive said.
Rahil Shaikh, MD, MEIR Commodities, told Business Standard that the export decision is largely symbolic and reflects official recognition of a surplus that could otherwise exacerbate cane arrears. “There are two ways to manage a sugar surplus: greater diversion towards ethanol or higher exports. As ethanol diversion has limited scope, more exports have been permitted,” he said.
He urged the government to allow sugar exports under the open general licence (OGL) regime and dismantle the quota system to enable port-based mills to move volumes more swiftly.
Weeks earlier, the Indian Sugar and Bio-Energy Manufacturers Association (Isma) warned that as the 2025-26 season progresses and inventories build, sugarcane payment arrears have begun to rise and may increase further if current market conditions persist. The industry, Isma said, is facing mounting operational and cash-flow stress due to the continued mismatch between cane prices and sugar realisations.
