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

Sugar smuggling along Nepal's southern border has intensified following India's export ban, implemented over two months ago to manage domestic prices amid El Niño concerns. The ban, effective until at least September 30, 2026, has driven up sugar prices in Nepal by approximately Rs15 per kilogram.

Nepali security forces reported a more than twofold increase in sugar seizures between mid-June and mid-July. The Armed Police Force confiscated 10 tonnes of smuggled sugar worth over Rs780,000 in July, a significant rise from the 4 tonnes seized the previous month. Most of this contraband was intercepted in the Tarai-Madhesh districts bordering India.

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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 accuse the government of failing to address the supply and pricing issues arising from India's ban. "The government has remained silent as if nothing is wrong," said Prem Lal Maharjan, president of the National Consumer Forum. He warned that without a clear supply policy, traders could exploit the situation through black marketing and price hikes as the crucial September-October festival season approaches.

Activists also highlight that the increased smuggling deprives the government of customs revenue and raises concerns about the quality and safety of illicitly imported sugar. The Salt Trading Corporation, a state-owned entity, currently holds 1,677 tonnes of sugar but awaits government directives for further procurement. Nepal's monthly sugar demand ranges from 20,000 to 25,000 tonnes, escalating to 30,000 tonnes during festivals, while domestic production falls short by approximately 100,000 tonnes annually.

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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.