India bans wheat exports to control spike in prices at home

INDIA—India has banned wheat exports with immediate effect as part of its steps to control the spike in prices at home, following huge crop losses due to a heatwave in March.

Consumer price inflation hit a near eight-year-high of 7.79 per cent in April with retail food inflation surging even higher to 8.38 per cent.

Export of all wheat, including high-protein durum and normal soft bread varieties, have been moved from “free” to the “prohibited” category with effect from May 13.

The notification said that the government had taken the decision “in order to manage the overall food security of the country and to support the needs of the neighboring and other vulnerable countries”.

India’s wheat exports topped an all-time-high of 7 million tons valued at USD$2.05 billion in the fiscal ended March 31, 2022.

In mid-February, the Agriculture Ministry estimated the country’s 2021-22 wheat crop (marketed in 2022-23) at a record 111.3 million tons.

Based on that, it was expected that India’s wheat shipments would be anywhere from 10 million tons to 15 million tons this fiscal

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This led global buyers to start banking on India – the world’s second largest wheat producer after China – for supplies after exports from the Black Sea region dropped since Russia’s invasion of Ukraine in late February.

In line with this, just two days prior to the ban, the government announced its plans for a big export push. 

Issuing a press release regarding the Centre sending trade delegations to nine countries – Morocco, Tunisia, Indonesia, Philippines, Thailand, Vietnam, Turkey, Algeria and Lebanon – “for exploring possibilities of boosting wheat exports from India”.

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The government’s original export projections did not factor in the yield losses from the mid-March temperature hike which caused damage to standing wheat crop across Northern India.

According to The Indian Express, the government’s own internal revised estimate of wheat production for 2021-22 is now 95 million tons, the lowest since the 92.3 million tons of 2015-16.

Only export shipments for which letters of credit have been issued on or before the day the ban was enforced will be allowed, the government said. 

Additionally, the government will allow exports on requests from other countries to meet their food security needs, the notification issued by Directorate General of Foreign Trade said.

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