Don't want wheat to be exported in an unregulated manner, says govt

No order is in perpetuity, wheat export ban be reviewed, says commerce secretary B V R Subrahmanyam

Hours after imposing a ban on wheat exports, senior government officials on Saturday said that the step has been taken to divert supplies to poor, vulnerable nations and stop unregulated outbound shipments that often result in hoarding.

They also said that going ahead, if global prices change, the ban can be reviewed.

“No order is in perpetuity. If the figures change, if global prices change, if the food and agriculture departments are comfortable, it will be reviewed,” commerce secretary B V R Subrahmanyam told reporters.

The food ministry, after tweaking the proportion of wheat and rice that it will distribute under the free foodgrains distribution scheme in favour of the latter, has done the same for regular public distribution system as well. Under PDS, the Centre will distribute 6.1 million tonnes more rice than wheat in 12 states from June to March 2023. This wheat, saved from being sold through the ration shops, will then be added on to the Centre's inventory. Through this, Centre plans to save around 11.6 million tonnes of wheat that will add on to the inventory.

On Friday late night, the government banned all types of wheat exports with immediate effect to salvage its falling inventories. The order said that the decision was taken to manage the overall food security of the country and support the needs of neighbouring countries.

“So what is the purpose of this particular order? What it is doing is, in the name of prohibition (ban), we are directing the wheat trade in a certain direction. We do not want wheat to go in an unregulated manner, to places where it either may get hoarded or where it may not be used for the purpose that we are hoping for–serving the food requirements of vulnerable people and nations,” Subrahmanyam said, citing the reason for keeping government-to-government window trade for wheat open.

Apart from food security of India, the government said it's committed to ensure food security of neighbouring and vulnerable countries. For instance, India exported 7.5 million tonnes of wheat last year, half of which went to India’s neighbouring country–Bangladesh.

According to the order, if an exporter has a valid order and irrevocable letter of credit, then that  contract will be honoured. As a result, India’s reliability as a supplier is maintained by not reigning on any existing contract, the commerce secretary explained.

Food secretary Sudhanshu Pandey, who was also addressing the press conference, said that the decision was taken in view of the price rise as well as inflation that was being imported along with the global prices and this was happening in the case of wheat as well.

International prices have been going up. Other than India, wheat is being sold at $480 per tonne that is pushing prices in the domestic market. Government officials said that there has been a spike in wheat and atta prices across the country. In certain regions, prices have gone up by 30-40 per cent, as a result of speculative trading.

In India, due to the early onset of summer, production forecast has come down to 105 million tonnes from 111 million tonnes. According to Pandey, India has adequate stock of wheat and clarified that there isn't a ‘dramatic’ fall in production.

He further said that India is not the only country to impose restrictions on export. During March-April, seven countries – Russia, Argentina, Kazakhstan, Hungary, Bulgaria, Turkey, Philippines – have also imposed various kinds of restrictions, including a ban on wheat export.

Export demand from India has seen a surge this year due to shortage of wheat in world markets because of the Russia-Ukraine war.

The decision to stem the flow of wheat for exports came barely months after the government went euphoric about India "feeding the world". Thereafter, procurement for the 2022-23 season struggled to reach the revised target of 19.5 million tonnes.

This target was itself, almost 56 per cent lower than the original procurement estimate of 44.4 million tonnes.

Procurement dropped as farmers sold their wheat to private traders lured by prices, which were higher than the state mandated MSP of Rs 2,015 per quintal.

Government purchases also suffered as overall wheat production in FY23 marketing year dropped by at least 6 million tonnes from an earlier estimate of 111.3 million tonnes.