India bans wheat exports to control domestic prices
Congress says, it is anti-farmer; Govt justifies decision
New Delhi: With retail prices of wheat and wheat flour rising by 14-20 per cent in the last one year, the government has banned wheat exports to control rising domestic prices and meet the foodgrain requirement of neighbouring and vulnerable countries.
“The export policy of wheat … is prohibited with immediate effect…,” the Directorate General of Foreign Trade (DGFT) said in a notification issued late Friday. 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 opposition party Congress criticised the government for imposing the ban, saying it has taken a ‘U turn’ on the issue, but the top government officials justified the move stating that the restrictions have been taken at the “right time” and primarily to tame inflation.
“When publicity drives decisions, you get Policy Bankruptcy,” Congress leader Rahul Gandhi tweeted.
Former Finance Minister P Chidambaram said, “…banning the export of wheat is an anti-farmer measure. It deprives the farmer of reaping the benefits of higher export prices. It is an anti-farmer measure and I am not surprised, this government has never been very friendly to the farmer.”
According to the DGFT notification, 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.
India’s wheat exports stood at an all-time high of 7 million tonnes, valuing USD 2.05 billion, in 2021-22 fiscal year on better demand for Indian wheat from overseas. Of the total wheat exports, around 50 per cent of shipments were exported to Bangladesh in the last fiscal.
To justify the ban, Commerce Secretary B V R Subrahmanyam, Food Secretary Sudhanshu Pandey and Agriculture Secretary Manoj Ahuja held a press conference here and asserted that there was no crisis of wheat supply in the country and the move is to control prices of wheat and wheat flour.
“At the end of the day, food is a very sensitive item for every country because it affects everybody – poor, the middle and the rich,” the commerce secretary said, adding wheat flour prices have gone up in some parts of the country by about 40 per cent.
The government is also committed to ensuring the food security of neighbours and vulnerable countries.
“So, we have kept the window open for (our) neighbours. We have also kept the window open for a large number of vulnerable countries if their governments do make such requests…The order is to divert trade to the needy, poor and the vulnerable countries,” he added.
Talking about the current fiscal 2022-23, he said as per estimates, 4.3 million tonnes of wheat have been contracted for exports so far.
Out of this, 1.2 million tonnes have already been exported in April and May, and another 1.1 million tonnes are expected to be shipped, he said, adding “if you have a valid order – irrevocable letters of credit – that contract will be honoured. So, India’s credibility as a reliable supplier is maintained”.
Further, he said that if the price situation improves, the government may review this decision.
“No order is in perpetuity. If these figures get changed and global prices changed. If food and agriculture departments are comfortable, again it (the decision) will be reviewed,” he said.
Official data released this week showed that retail inflation surged to an eight-year high in April due to high prices of fuel and food items.
The ban on exports also comes amid disruption in global wheat supplies due to the ongoing war between Russia and Ukraine which are major exporters of the foodgrain.
The Food Secretary noted that many other countries such as Turkey, and the US have imposed different restrictions on wheat exports.
On wheat crop, Ahuja said it is likely to be around 105-106 million tonnes in 2021-22 crop year (July-June) as against the earlier projection of 111.32 million tonnes. In the previous crop year, it was little over 109 million tonnes.
Amid lower production and higher purchase of wheat crop by private parties, the government’s wheat procurement is likely to drop drastically to around 18 million tonnes in the ongoing 2022-23 marketing year (April-March) as against last year’s an all-time high of 43.34 million tonnes in the previous marketing year.
India was looking to export 10 million tonnes of wheat in 2022-23. The commerce ministry recently stated that India would send trade delegations to nine countries – Morocco, Tunisia, Indonesia, the Philippines, Thailand, Vietnam, Turkey, Algeria and Lebanon – to explore possibilities of boosting wheat shipments.
Farmers’ body Bharat Krishak Samaj (BKS) has expressed unhappiness over the ban on wheat exports, saying that restrictions on shipments of farm produce are an “indirect tax” on farmers.
“Sadly, India has banned exports of wheat. Restrictions on agricultural exports are an indirect tax on farmers in countries where imposed,” Bharat Krishak Samaj Chairman Ajay Vir Jakhar told PTI.
Flour millers’ association RFMFI on Saturday welcomed the government’s decision to ban wheat exports, saying this will prevent “unnecessary panic” in the market regarding domestic supply and also help in controlling any price rise.
Roller Flour Millers Federation of India (RFMFI) President Anjani Aggarwal said the association had written to the government to regulate exports. “It is a very good decision by the Government at this stage, as this will prevent unnecessary panic in the country about wheat supply and prices.”