On Friday, India announced a ban on wheat exports, just a day after announcing that it would be sending trade officials to nine different countries to new explore new opportunities to expand its exports of the grain.
The Directorate of Foreign Trade released a notice in the government gazette that amended its wheat export policy from “free” to “prohibited,” effectively banning the export of wheat. The release said that the decision was made in light of the “sudden spike in global prices of wheat,” which has been sparked by the Russia-Ukraine war, with the two countries cumulatively accounting for 12% of global wheat exports.
It added, however, that India remains committed to ensuring food security in neighbouring and vulnerable countries that have been exacerbated by the “sudden changes in the global market.” Hence, the notice clarified that exports will be permitted if the central government grants special permission to provide wheat to meet the food security needs of other countries. The exports will also be allowed if an irrevocable Letter of Credit has already been issued.
Wheat stocks are comfortable. Decision to restrict wheat exports taken with focus on India’s food security, ensuring affordable foodgrains & to combat market speculation. India, a reliable supplier will fulfil all commitments including needs of neighbours & vulnerable countries.
— Hardeep Singh Puri (@HardeepSPuri) May 14, 2022
Similarly, Indian Minister of Petroleum and Natural Gas Hardeep Singh Puri stressed, however, that India remains a “reliable supplier” and reassured that it would fulfil its existing obligations, including to neighbouring and vulnerable countries.
Taking to Twitter, he clarified that while the wheat stocks are “comfortable,” the decision to ban export of the grain was taken keeping in mind the need to focus on India’s “food security” by “ensuring affordable foodgrains” and combatting “market speculation.”
The decision is meant to serve India's food security at a time when the extent of price rise is disproportionate to the drop in output.
— Piyush Goyal (@PiyushGoyal) May 14, 2022
Govt. has stepped in to manage unregulated wheat trade but stands committed to honour all valid future shipments already entered into.
Thereafter, Secretary of the Department of Food and Consumer Affairs Sudhanshu Pandey, Secretary of Agriculture Manoj Ahuja, and Commerce Secretary BVR Subrahmanyam held a press conference to address concerns about the decision. Commerce Secretary BVR Subrahmanyam said that the order serves three purposes: “It maintains the food security for the country, it helps others who are in distress, and maintains India’s reliability as a supplier.” He raised concern about “unregulated” wheat exports, which he said results in hoarding and impedes the ability of exporting nations to meet the food demands of “vulnerable nations and vulnerable groups.”
In this regard, Subrahmanyam emphasised that exporters will be allowed to use “government channels” to fulfil “the genuine needs of [India’s] neighbours and food-deficit countries but also control inflationary countries.” He added that private companies will be allowed to meet their commitments, meaning that India will still export 4.3 million tonnes of wheat till July. However, he clarified that while existing export deals would be fulfilled, future deals would require the Central government’s approval.
Breaking: India bans exports of Wheat; Govt notification issued pic.twitter.com/1KTArVnARo
— Sidhant Sibal (@sidhant) May 14, 2022
Watch: Commenting on India banning wheat export and global food crisis amid Russian invasion of Ukraine, German foreign minister Annalena Baerbock says it shows "how serious this crisis is". pic.twitter.com/MioCaZa6CJ
— Sidhant Sibal (@sidhant) May 14, 2022
In addition, Secretary of the Department of Food and Consumer Affairs Pandey reassured that the country has enough stocks to meet domestic demand. On consultation with states, the central government has changed the rations of the allocation of wheat and rice. For instance, states receiving wheat and rice in a 60:40 ratio will now be allocated the grains in a 40:60 ratio. However, states that receive no rice will continue to receive wheat. Meanwhile, smaller states in the northeast and other “special category states” will continue to receive rice and wheat in the previous ratios.
With this reallocation, Pandey clarified that wheat’s availability has been boosted by 10-11 million metric tonnes.
India’s decision has attracted criticism from the G7 agriculture ministers, who raised concern about the impact of the ban on global food security during their meeting in Germany. According to German Agriculture Minister Cem Özdemir, the G7 “spoke out against the export stops” and called for “markets to be kept open.” In this regard, he said, “We call on India to assume its responsibility as a G20 member.”
The ban on wheat exports came within 48 hours after the commerce ministry announced trade delegations to 9 countries “to explore possibilities of boosting wheat exports from India”. Then what accounted for the U turn within 48 hours? It just tells you how this govt works!(contd)
— M K Venu (@mkvenu1) May 15, 2022
The drastic measure comes as wheat prices in India have surged to a record high of $320 per tonne, well above the government’s minimum support price of $260. This is a combined result of the global shortages caused by the Russia-Ukraine war as well as India’s ongoing heatwave, which has significantly affected production. Moreover, India’s stock of wheat has also been severely depleted by the government’s decision to deliver free grains to over 800 million people during the COVID-19 pandemic.
India also sought to capitalise on the global shortages caused by the Ukraine war and in fact exported a record 7.85 million tonnes in the fiscal year up to March, an increase of 275% from the previous fiscal year. Moreover, the government envisioned that it would increase exports to 12 million tonnes in the 2022-23 fiscal year and said it was ready to harvest an all-time record harvest back in February. However, wheat production is now down between 6 and 10% due to “terminal heat and heat waves.”
A majority of its exports are destined for neighbouring countries such as Bangladesh, Nepal, and Sri Lanka, along with Indonesia and the United Arab Emirates. However, previously, countries have raised concerns about importing wheat from India over concerns about its quality, as it is often purchased in large volumes and with guaranteed minimum prices.
Modi Government’s decision to restrict wheat export will:
— Piyush Goyal (@PiyushGoyal) May 14, 2022
▶️ Ensure food security for India
▶️ Ensure sufficient supply to vulnerable countries
▶️ Maintain India’s reliability as a supplier
▶️ Control inflation
📖 https://t.co/p1RnEVjBhp
Moreover, the decision to restrict the export of wheat was made just a day after India said that it would send trade officials to Morocco, Tunisia, Indonesia, Philippines, Thailand, Vietnam, Turkey, Algeria, and Lebanon to increase its wheat exports.
In fact, just last Wednesday, Turkey ordered 50,000 tonnes of wheat from India. Egypt, too, the world’s biggest wheat importer, has looked into providing accreditation to India as a wheat import origin country.
We see economic collapse.
— Congress (@INCIndia) May 15, 2022
Some days back the Prime Minister said we are going to be exporting wheat and then suddenly, a few days later, we are not going to be exporting wheat. We put a ban on it.
: Shri @RahulGandhi#NavSankalpShivir
Furthermore, Turkey and Egypt, the latter of which is one of the world’s largest importers of wheat, approved the import of the grain from India recently. In fact, Indian Commerce and Industry Minister Piyush Goyal met with the Egyptian Minister of Planning and Economic Development Hala Elsaid in Dubai in March to discuss a potential deal.
Goyal proclaimed last month: “Our farmers have ensured that not just India but the whole world is taken care of.” He also announced that wheat exports would be raised from seven million tonnes in 2021 to ten million tonnes in 2022.
Indian farmers are feeding the world.
— Piyush Goyal (@PiyushGoyal) April 15, 2022
Egypt approves India as a wheat supplier. Modi Govt. steps in as world looks for reliable alternate sources for steady food supply.
Our farmers have ensured our granaries overflow & we are ready to serve the world.https://t.co/h56oSc3HDC
Critics believe that the about-turn was a result of the lack of communication between the Prime Minister’s office, who made the decision to ban exports, and the Commerce Ministry. To this end, they argue that decision should have been made in consultation with the ministry and the respective secretaries to ensure that the government achieved a balance between securing supplies for domestic demand and exporting wheat to ensure global food security. The government is yet to comment on allegations of miscommunication, however.