The Directorate General of Foreign Trade (DGFT) has launched an investigation after reports surfaced that sugar, which was meant for export to the Maldives under a government-level bilateral agreement, was diverted to Sri Lanka. India had allocated a total of 64,494.33 tonnes of sugar for the Maldives under this agreement. However, complaints emerged that some exporters misused part of the allocated quota.

As a result, DGFT has halted sugar exports to the Maldives while investigating the issue. Reports indicate that at least seven sugar consignments intended for the Maldives were stopped at India's Nhava Sheva port due to suspicions of diversion to unauthorized destinations.

Meanwhile, Sri Lankan customs officials have detained around 70 containers of Indian sugar delivered to the Colombo port, as they suspect the sugar was not intended for Sri Lanka but was diverted from its original destination.

India has had a ban on the commercial export of sugar since June 2023. However, exports under bilateral agreements, like the one with the Maldives, are allowed. In April 2024, India set specific export quotas for various commodities, including sugar, to the Maldives and outlined that shipments should be routed through specific sea ports.

The investigation into the diversion of sugar has led to the suspension of shipments from these ports, while Sri Lankan authorities have begun separate investigations into the local buyers involved in the diverted consignments.