India's sugar production for the period between October 1 and December 31 witnessed a notable decline of 7.6% year-on-year, totaling 11.21 million metric tons, according to a statement released by the National Federation of Cooperative Sugar Factories on Tuesday.

The dip is primarily attributed to reduced output in the key sugar-producing states of Maharashtra and Karnataka. Maharashtra, a significant contributor to the country's sugar production, experienced a decrease from 4.74 million tons to 3.82 million tons, marking a 19.4% decline.

Similarly, Karnataka witnessed a notable 10.1% reduction, with sugar production dropping to 2.4 million tons. However, the northern state of Uttar Pradesh bucked the trend with a 12.5% increase, reaching 3.5 million tons, driven by early commencement of mill operations.

This decline in sugar output aligns with concerns raised by traders and a survey of farmers, indicating that India's sugar production for the current crop year may fall behind consumption levels for the first time in seven years. Weak monsoons have impacted the crop, and lower plantings could potentially necessitate sugar imports for the world's second-largest producer in the following year.

To address the situation, India has taken proactive measures by allowing sugar mills to divert up to 1.7 million tons of sugar for ethanol production. This move is part of New Delhi's efforts to minimize disruptions in its ambitious biofuel program. 

As Prime Minister Narendra Modi faces upcoming elections, the country, sensitive to food inflation, is contemplating a potential ban on sugar exports. If implemented, it would mark the first restriction on exports since 2016, reflecting the government's commitment to managing domestic supply and demand dynamics amidst challenging agricultural conditions.

ALSO READ: Anticipated Q3 Results: IT Sector Braces for Subdued Revenue and Profit Amidst Lingering Weak Demand