India is likely to produce 21.3 million tonnes sugar in 2016/17, down 9 per cent from an earlier forecast of 23.4 million tonnes, as drought curtailed cane supplies in key producing states, a trade body said on Wednesday.

A drop in production could lift local prices and prompt the world's biggest consumer to allow duty-free imports of the sweetener, supporting global prices that are trading near their highest level in one-and-a-half months.

Sugar mills in top producer Maharashtra and third biggest producer Karnataka are closing earlier than initial expectations, Indian Sugar Mills Association said in a statement.