Sugar supply will remain tight in the global market as India today extended its ban on the export of the sweetener beyond October this year in an effort to increase domestic availability and contain prices, said officials of two local refiners.

The restriction is likely to fuel prices of sugar in the international market further, affecting Bangladesh as the country meets 98 percent of its required 20 lakh tonnes through sugar imports.

"There will be extra pressure on the global market because India is a major player in the international sugar market. If the world market is short on sugar, there will be a domino effect which may affect us," said ASM Mohiuddin Monem, additional managing director of Abdul Monem Ltd, which runs a sugar refinery.

In a disclosure, India's Directorate General of Foreign Trade (DGFT) said restrictions on the export of raw sugar, white sugar, refined sugar, and organic sugar would be extended beyond October 31, 2023.

India is the largest producer and second-largest exporter of sugar in the world.

Reuters yesterday said India's curb on exports would be likely to increase benchmark prices in New York and London, where markets are already trading around multi-year highs, triggering fears of further inflation in food prices globally.

Globally, sugar prices soared further to US$0.58 per kilogramme in September from $0.53 a month ago, according to World Bank Commodities Prices data.

The price of sugar was 35 percent higher year-on-year compared to $0.40 per kg in July-September of 2022.

Locally, sugar prices climbed and hit a record high of Tk 140 in May this year due to rising global prices and a sharp devaluation of the taka against the US dollar.

Yesterday, the retail sugar price was between Tk 130-Tk 135 per kg in Dhaka's markets. That price was 43 percent higher than a year ago, market prices data by the Trading Corporation of Bangladesh showed.

October-March is crushing season in India while sugar from Brazil arrives later in the year.

Taslim Shahriar, deputy general manager at Meghna Group of Industries (MGI), said an export ban by India had been in place for some time and that the global sugar market remained very volatile.

Sugar is being traded at record-high prices and India's extension of the export ban is not good news, he said.

"If prices rise in the world market due to the ban, it is likely to affect us," said Shahriar. "Global prices will drop if India withdraws the ban."

Abul Hashem, former vice president of Bangladesh Sugar Merchant Association, said sugar prices remained steady at wholesale markets yesterday. There has been no effect on the market so far, he said.

Monem urged the government to reduce import duty on sugar to offset the impact of the price hike in the international market.

India's sugar export restrictions have been in place for the past two years, he said. During this time, India allocated export quotas to mills, according to Reuters.

Under the restrictions, an exporter requires a licence from the government to export sugar.

In the last season that ended on September 30, India allowed mills to export only 62 lakh tonnes of sugar. They were permitted to sell a record 1.11 crore tonnes of sugar in 2021-22, Reuters reported.

"The export restriction was expected. Instead of the usual one-year limit, this time the government has imposed an indefinite export restriction," a Mumbai-based dealer with a global trade house told Reuters.

"It is unlikely to allocate export quotas this year, as its goal is to reduce prices before the elections."

Five Indian states will elect new state legislative assemblies next month, beginning the process of regional polls ahead of national elections next year.