Probe launched as India’s sugar exports to Maldives diverted to Sri Lanka

India has launched an investigation into sugar exports from the country to the Maldives was diverted to Sri Lanka.

As reported by Indian news outlets, the Directorate-General of Foreign Trade (DGFT), which is responsible for formulating and implementing the Foreign Trade Policy with the main objective of promoting India's exports, is investigating a case involving sugar exports from the country to the Maldives under a bilateral treat being diverted to Sri Lanka.

In this regard, the investigation pertains to 64,494.33 tonnes of sugar, of which a part was allegedly mishandled by some exporters.

While DGFT has launched a probe, sugar exports to Maldives have been halted as per Indian media outlets with at least seven parcels of sugar set to be exported to the Maldives being withheld at Nhava Sheva Port on suspicions it was being diverted to another location.

It was also reported that Sri Lankan Customs have seized approximately 70 containers of sugar from India which were diverted to the country. 

The reports say exports of sugar to Maldives have almost come to a standstill. While Sri Lankan officials have stopped clearance of sugar shipments at Colombo, they have launched a separate probe into buyers based in the country.

Citing trade sources, the reports said over 80 containers exported from India to the Maldives landed in Colombo until mid-October.

The reports referenced a bill of lading dated September 30^th which showed that 270 tonnes of sugar was dispatched from Nhava Sheva Port with final port of destination as Colombo. The bill claimed that the cargo was in transit to Male’ at the consignee’s risk and in this trajectory, had a curious note asking buyers to return the empty contactors to a carrier nominated depot in Colombo on consignee account despite Male’ port not being a minor port that requires such action.  

The reports read that invoices raised for such shipments were later switched to show the destination as Colombo and the buyer as a Sri Lankan trader; something which they attributed to the need to generate documents for exports and customs clearance for the country which the shipment is permitted. In this regard, shipments can only be exported to the country that is specified in the documents.

Once the cargo is out of customs’ charge, the bill of lading is then switched to the destination to which the shipment will be diverted and the invoice is substituted to reflect this accordingly.

Reports say that some shipments fraudulently diverted in this manner have gone to Port Klang in Malaysia from Nhava Sheva Port.

Notably, India did not allow sugar exports last year and this year due to a decline in production. However, it allowed limited exports to a few nations including Maldives. DGFT decided that such shipments under bilateral treaties would only be exported via Mundra, Tuticorin and Nhava Sheva ports and Inland Container Depot, Tughlakbad.