India, the world’s second largest producer of wheat after China, has banned wheat exports with immediate effect saying it is part of its steps to control the price surge at home, manage the overall food security of the country and support the needs of the neighbouring and other vulnerable countries. The decision is contrary to India’s big export plans, especially against the backdrop of an affected global supply chain due to the Russia-Ukraine conflict. Further, the Government is under pressure to rein in inflation that surged to 7.79 per cent in April.
Incidentally, the decision also comes just a day after the Government even announced to send trade delegations to nine countries “for exploring possibilities of boosting wheat exports from India”.
“The export policy of wheat is prohibited with immediate effect,” the Directorate General of Foreign Trade (DGFT) said in a notification on Friday. However, the export shipments for which irrevocable letters of credit (LoC) have been issued on or before the date of this notification will be allowed, the DGFT stated.
It also clarified that wheat exports will be allowed on the basis of permission granted by the Government of India to other countries to meet their food security needs and based on the request of their Governments.
New Delhi’s decision would be a setback to global buyers who had been banking on India for supplies after exports from the Black Sea region dropped since Russia’s invasion of Ukraine in late February. Russia and Ukraine together account for almost a quarter of the global wheat supply.
Last month, Prime Minister Narendra Modi too had said, “If the WTO gives permission, India is ready to supply food stock to the world from tomorrow.”
“Currently, there is adequate food stock in the country. There is a sudden spike in the prices of wheat in the country. Unregulated trade is the reason behind the prices going up. Our primary goal is to check the inflation,” said Sudhanshu Pandey, Secretary, Department of Food & Public Distribution.
The move to ban wheat exports also comes after huge crop loss due to a heatwave in March. The Agriculture Ministry had in mid-February estimated India’s 2021-22 wheat crop at a record 111.3 million tonnes but it has since scaled down the estimate to around 95 mt.
The ban move comes just a day after the government announced its big export plans. “The Centre will send trade delegations to Morocco, Tunisia, Indonesia, Philippines, Thailand, Vietnam, Turkey, Algeria and Lebanon for exploring possibilities of boosting wheat exports from India. India has set a target of a record 10 million tonnes of wheat in the 2022-23 amid rising global demand for the grain globally,” a Government statement said on Thursday.
“We are extending our support to all the stakeholders in the wheat exports value chain for boosting shipment from the country,” M Angamuthu, Chairman, Agricultural and Processed Food Products Exports Development Authority, said at a sensitisation meeting on wheat exports in Karnal, Haryana, according to a Government release.
The Department of Commerce planned to organise several such meetings in major wheat growing states such as Punjab, Haryana, Madhya Pradesh, Uttar Pradesh and Rajasthan, it added.
Recently, Union Commerce and Industry Minister Piyush Goyal had also said India’s wheat exports are likely to cross 100 lakh tonnes (10 million tonnes) during 2022-23, due to increasing demand for the commodity in the world market.
“We will continue to export wheat in a big way and meet the needs of the countries that are not getting their supplies from the conflict areas, and my own sense is that this time we will probably exceed our wheat exports (of) over 100 lakh tonnes comfortably,” he said.
India is in final talks to start wheat export to Egypt, while discussions are going on with countries like China, Turkey and Iran to begin the outbound shipments of the commodity. The exports have crossed 70 lakh tonnes in 2021-22 (worth over Rs 15,000 crore) as against 21.55 lakh tonnes (over Rs 4,000 crore) in 2020-21. It was only two lakh tonnes (Rs 500 crore) in 2019-20. The Minister said wheat exports have helped several countries in meeting the requirements of food security.
In a separate notification, the DGFT announced the easing of export conditions for onion seeds. “The export policy of onion seeds has been put under the restricted category, with immediate fact,” it said. The export of onion seeds was earlier prohibited.