India's sugar export ban fuels smuggling ahead of Nepal's peak festival season

Sugar smuggling along Nepal's southern border has intensified since India imposed an export ban over two months ago. The illegal trade is a growing concern as the peak festival season approaches in September and October.

The Armed Police Force reported a more than twofold increase in sugar seizures between mid-June and mid-July, confiscating 10 tonnes worth over Rs780,000, up from 4 tonnes in the previous month. Most of the intercepted sugar was found in the Tarai-Madhesh districts bordering India.

India, the world's second-largest sugar producer, banned exports on May 13 until September 30, 2026, or further notice. This move aims to curb domestic price rises amid fears that El Niño could reduce sugarcane output. In Nepal, sugar prices have already climbed by approximately Rs15 per kg, with retail prices now around Rs110.

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The issues of supply, pricing and market management of essential commodities have not been addressed by the government, just as they were ignored by previous administrations. It is surprising that the government has remained silent as if nothing is wrong.

Consumer rights advocates criticize the government for its slow response to India's ban. "The issues of supply, pricing and market management of essential commodities have not been addressed by the government," said Prem Lal Maharjan, president of the National Consumer Forum. He added that with the festive season nearing, the government lacks a clear supply policy to prevent traders from exploiting the situation through price hikes and black marketing.

Beyond lost customs revenue, the rise in smuggling raises questions about the quality and safety of the illicit sugar. The Salt Trading Corporation has 1,677 tonnes in stock but awaits government directives for more. Nepal's monthly sugar demand is between 20,000 and 25,000 tonnes, spiking to 30,000 tonnes during festivals. Annual demand reaches 300,000 tonnes, with domestic production falling short by 100,000 tonnes, necessitating imports.

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With the festive season approaching, the government still has no clear supply management policy. It should ensure sufficient stocks so that traders cannot exploit the situation through black marketing and price hikes.