India, the world's second-largest sugar exporter, is taking stock of its mills as global prices soar

The letter, also marked to industry associations, has urged them to advise and coordinate with sugar mills for the provision of information. The industry associations include the Indian Sugar Mills Association (ISMA), the National Federation of Cooperative Sugar Factories (NFCSF) and the All India Sugar Traders Association (AISTA).

With the launch of the Global Biofuel Alliance at the G20 summit and a push from the government to increase ethanol blending in fuel, sugar demand is set to grow beyond edible consumption.

This comes at a time when reports last week reports suggested that Switzerland-based trader Avlean expects a shortage of sugar supply this year due to expected lower production in India, the second-largest sugar producer in the world after Brazil.

India faced a 36 percent rain deficit in August, which was the driest August in a century leading to speculation that the Kharif crop output including sugarcane would be hit this year. The rain deficit in two key sugarcane-growing regions of Maharashtra and Karnataka was around 50 percent below average this year.

The expected lower output also led to expectations that India may impose a ban on sugar exports for the first time in seven years. Lower production and short supply fears led to a spike in sugar prices in the world markets.