India on Saturday prohibited wheat exports with immediate effect a day after its data showed annual consumer price inflation hitting a near eight-year-high of 7.79 per cent in April and retail food inflation surging even higher to 8.38 per cent.
Food security:
Citing the threat to food security, the government has "prohibited" the export of wheat. The decision was taken on Friday, in view of the "sudden spike in the global prices of wheat arising out of many factors," the Ministry of Commerce and Industry has informed.
The order came two days after the Government had decided to send trade delegations to a number of countries to explore possibilities of export of wheat.
"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 2022-23 amid rising global demand for the grain globally," a government statement said Thursday.
According to the official notification issued by the Centre, only export shipments for which letters of credit have been issued on or before yesterday's notification will be allowed.
"There is a sudden spike in the global prices of wheat arising out of many factors, as a result of which the food security of India, neighbouring and other vulnerable countries is at risk," said the Ministry in its notification.
Besides, the government will allow exports on requests from other countries, the notification issued by the Directorate General of Foreign Trade (DGFT) said.
The export will be allowed on basis of permission granted by the government of India to other countries to meet their food security needs and based on the request of the governments.
Global impact:
The ban will have a major effect on the global scale as most of the countries rely on India for wheat which is the second-largest producer of the crop after China.
India's ban could drive global prices to new peaks given already tight supply, hitting poor consumers in Asia and Africa particularly hard.
Banning wheat, the Centre said Friday that the government was committed to providing food security to its own people, its neighbours, and also some vulnerable countries and hence they have brought in the amendment in relevant sections of the "Export Policy".
What is the reason behind the ban?
Several internal factors such as record-low procurement of wheat by agencies, low yield in major wheat production states amid extreme heat conditions, rising prices and inflation are said to be some of the reasons behind the Centre's decision to ban the export.
Giving details, Secretary of Food Sudhanshu Pandey said that wheat export in 2019-20 was 2.17 lakh metric tonnes which had increased to 21.55 LMT in 2020-21, which, in turn, increased to 72.15 LMT in 2021-22.
"This season, about 40 LMT wheat has been contracted for export and about 11 LMT has already been exported in April 2022," Pandey had said.
"There is no move to curb wheat exports, as the country has sufficient stocks of wheat," Food Secretary Sudhanshu Pandey had then said.
Impact of the wheat export ban?
Amid the rising demand and higher prices offered by private traders, a shortage of wheat has caused a spike in wheat flour prices in Indian markets in the last few weeks.
As per reports, in India, the monthly average retail price of wheat flour (atta) was Rs 32.38 per kg in April, the highest since January 2010.
The ban on wheat export will help to lower the market prices of wheat and bring it closer to the MSP.
The measure taken by the Centre would help the government agencies to boost their procurement from states where it has been lagging.
(with sources inputs)
