May 16: Nepal imports a large amount of sugar required for domestic consumption from India. But the Indian media have reported that the Indian government is now preparing to ban the export of sugar to ensure there is adequate supply for the country’s domestic market.

If India bans sugar exports, it will have a big impact on Nepal.

In addition to direct consumption of sugar in Nepal, industries that manufacture chocolates, biscuits, sweets, ice cream, juice, beverages, bakery items and other products rely heavily in sugar imported from India.

Nepal currently needs 250,000 metric tons of sugar for direct consumption and industrial use. Sugar mills from across the country produce only 130,000 metric tons of sugar in Nepal. About 120,000 metric tons of sugar is imported from different countries, 90 percent of which is imported from India.

Omnath Maharjan, president of Nepal Biscuit Industry Association, says that since Nepal produces only half of the sugar required in the market, India's ban on exports will have a big impact.

"If India bans the export of sugar when the supply of sugar in Nepal is less than the demand, it will further increase the price," he said.

According to Maharjan, if India bans sugar exports the Government of Nepal should reduce or waive the customs duty imposed on imported sugar from third countries. He said that if this happens, the price of sugar imported from third countries will decrease and the quantity will increase. This in turn will facilitate the supply chain, argues Maharjan.

Similarly, Vice President of Nepal Ice Cream Industry Business Association Arniko Rajbhandari says that the ban on sugar import in India will increase the price of raw materials.

"This will naturally increase the price of the produced goods," he said. He said that if there is a ban, the price of sugar will increase by at least 20/25 percent. He emphasized that even if India bans the export of sugar, diplomatic efforts should be made to resume the import of sugar.

He added that since India has given special concessions to Nepal on some other goods in line with the ‘neighbour first policy’ and the close relations between the two countries, there is also a likelihood to expect special quota for sugar.

According to the Indian media, India currently has 27 million tons of sugar, which is required for its internal consumption. It has been reported that the Government of India is preparing to ban the export of sugar fearing that the price will increase in the country if there is no excess of sugar.

This year, India will be holding elections of various state assemblies and the Lok Sabha elections will be held in 2024. The ruling party there is afraid that if the price increases, it will suffer a setback in the elections.