Pakistani Sugar Mills Request Export Clearance to Ship 12 Lakh Tonnes of Excess Stock to India Amid Rising Local Prices

Facing severe warehouse congestion and lower domestic prices, the Pakistan Sugar Mills Association has petitioned its government to allow the export of 1.2 million tonnes of surplus sugar to India, capitalizing on rising Indian prices and reduced import duties.

Amid a noticeable surge in domestic sugar prices in India, sugar mill owners in neighboring Pakistan are actively exploring opportunities to tap into the Indian market to relieve their own mounting inventory pressures. Confronted with massive stockpiles rotting in storage facilities, Pakistani sugar traders are eager to clear out excess supply. The Pakistan Sugar Mills Association (PSMA) has officially submitted a proposal to its government seeking authorization to export approximately 12 lakh tonnes of surplus sugar to India. Mill owners contend that granting export permission would deplete excess inventory, generate much-needed cash flow for struggling processing units, and enable prompt payments to local sugarcane farmers. This export push comes at a time when India has taken measures to contain domestic price inflation by removing import duties on sugar. Given the shared geographical land border, Pakistani millers argue that freight and logistics costs to Indian destinations would be substantially lower compared to distant international markets, positioning them as highly competitive suppliers.

Mounting Inventory and Storage Pressures in Pakistan
The statistical profile of Pakistan's sugar sector underlines the scale of the current inventory crisis. As of August 15, total sugar reserves held across warehouses nationwide stood at 28.1 lakh tonnes. With Pakistan's average monthly domestic consumption pegged at around 5.5 lakh tonnes, the existing inventory is more than sufficient to fulfill internal market requirements through at least December 2026. However, millers face an impending bottleneck as the new sugarcane crushing season is scheduled to commence in November. The upcoming harvest is projected to generate an additional 80 lakh metric tonnes of sugar. If the existing surplus is not evacuated from storage facilities ahead of the new crushing period, warehouses will face acute capacity constraints, exacerbating operational disruptions for the industry.

Falling Ex-Mill Prices and Severe Financial Strain
Beyond physical storage limits, a sharp decline in domestic prices has severely impacted the financial viability of Pakistani sugar mills. Ex-mill sugar prices have dropped to between 130 and 135 Pakistani rupees per kilogram, a level that millers state is below the actual cost of production. This combination of depressed selling prices and large volumes of unsold inventory has triggered a severe liquidity crunch across the sector. Consequently, mill operations are under strain, leaving companies struggling to service bank loans and clear outstanding dues owed to sugarcane growers. In light of these domestic headwinds, millers view the price rally in India as an opportunity to restore profitability and cash flow.

Government Tenders, Unsold Stock, and Geopolitical Trade Hurdles
Adding another layer to the domestic supply scenario, Pakistan's Economic Coordination Committee (ECC) authorized the Trading Corporation of Pakistan (TCP) to issue an international tender for 1.08 lakh metric tonnes of sugar. This quantity represents the remaining portion of a 3 lakh metric tonne shipment imported during the previous year. Prior efforts to liquidate this imported stock within the domestic market were twice unsuccessful due to prevailing low local prices. This dynamic highlights internal policy contradictions, where low domestic prices co-exist with leftover imported government reserves while private millers seek permission to export their surplus abroad. Furthermore, because bilateral trade between India and Pakistan has remained largely suspended for an extended period, it remains entirely uncertain whether Indian authorities would consider purchasing sugar from Pakistan, leaving the proposal strictly as an unapproved demand from the Pakistani sugar industry.

What this means for you
In India: Any potential sugar imports from Pakistan in the future could increase domestic supply and help stabilize retail prices for consumers.

In Pakistan: Exporting surplus sugar would provide immediate liquidity to mills, enabling them to clear overdue payments to local sugarcane farmers.

Questions & Answers

1. What has the Pakistan Sugar Mills Association (PSMA) requested?
The PSMA has asked the Pakistani government for permission to export approximately 12 lakh tonnes of surplus sugar to India.

2. How much sugar stock does Pakistan currently hold?
As of August 15, Pakistan held 28.1 lakh tonnes of sugar stock, which is sufficient to meet domestic demand through December 2026.

3. What major financial challenge are Pakistani sugar mills facing?
Ex-mill prices have dropped below production costs to 130-135 Pakistani rupees per kg, creating a severe liquidity crisis and payment delays to farmers.

4. Will India import sugar from Pakistan?
No decision has been made. Bilateral trade between both nations has been stalled for a long time, making this proposal an unapproved demand by Pakistani millers.

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