July raw sugar SBc1 rose 1.88 per cent to 18.93 cents per lb and August white sugar LSUc1 jumped 1.77 per cent to $568.70 a tonne after the Reuters report.
Meanwhile, shares in leading sugar producers such as Shree Renuka Sugars, Bajaj Hindustan Sugar and E I D-Parry (India) Ltd fell between 2 per cent and 6 per cent.
Among factors underpinning global sugar prices this year are lower sugar output in Brazil, a leading producer and the biggest exporter, and crude oil prices at multi-year highs. Higher crude oil prices encourage sugar mills to divert more cane to produce ethanol for blending into gasoline.
Brazil's sugar production is set to rebound during the current season, but with restricted exports from India, traders do not expect prices to come down and they instead could go higher.
"There is a need to regulate exports to avoid any kind of panic in the market," said a senior government official with knowledge of the matter.
While the sources expected next season's export cap to be set between 6 million and 7 million tonnes, the exact quantity will be fixed near the start of the 2022/23 season, they said.
The government will look at the performance of the monsoon before fixing the quota, they added.
Monsoon rains in sugarcane growing areas of the western India state of Maharashtra, the biggest producer in the country, were 60 per cent below average since the start of the rainy season on June 1, according to weather office data.
New Delhi on May 24 imposed restrictions on sugar exports for the first time in six years with a cap for this season of 10 million tonnes.
Record exports in the current season could bring down inventories to 6.5 million tonnes on Oct. 1, when the next 2022/23 season starts, versus 8.2 million tonnes a year earlier, industry and government estimates show.
Aditya Jhunjhunwala, president of the Indian Sugar Mills Association (ISMA), a producers' body, has requested that the government allow mills to export 8 million tonnes of sugar next year, as output could exceed this year's record 36 million tonnes, according to a letter seen by Reuters.
The letter also urged the government for an early decision on next year's export quota to help mills cash in on firm global prices.
The government should boost exports in the first few months of the new season and take a call on the export quota once the production scenario becomes clear sometime in April 2023, the ISMA said in a statement.
India mainly exports to Indonesia, Bangladesh, Sudan, the United Arab Emirates, Nepal and China.