Explained: Why India Banned Wheat Exports Despite Big Trade Plans

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NEW DELHI: In a drastic move, India on Saturday announced a ban on wheat exports with immediate effect in a bid to control rising domestic prices.
Interestingly, the move comes just days after India said it was aiming for record shipments this year.
Here’s what you need to know about India’s wheat export ban…
The reason
The main question is: why did India, the world’s second largest wheat producer, decide to stop its exports?
Blame it on the war and the torrid heat wave.
World wheat prices have risen more than 40% since the start of the year due to the Russian invasion of Ukraine.

Before the war, Ukraine and Russia accounted for a third of world wheat and barley exports. However, since the Russian invasion on February 24, Ukrainian ports have been blocked and civil infrastructure and grain silos have been destroyed.

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At the same time, India’s wheat crop has been hit by a record heat wave that is dampening production.
Although it produces an abundant amount of wheat, India consumes most of what it produces.
It had set a target of exporting 10 million tonnes of grain in 2022-23, seeking to capitalize on global disruptions in wheat supplies due to war and find new markets for its wheat in Europe, in Africa and Asia.
The government itself was quite confident as it had estimated that production would reach a record high of 111.32 million tons.
However, a sharp and sudden increase in temperatures in mid-March meant that the size of the crop previously anticipated by India would be smaller than expected.

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This has thrown a stone in the wheel, forcing India to prioritize its own needs first.
The knights
Although India no longer supplies wheat to the world, the government ban is not a blanket suspension of exports.
The government said exports could still take place if New Delhi approved a request from other governments “to meet their food security needs”.
Additionally, any export agreements made before the directive issued on Friday could still be honoured.
The government also said the decision to ban overseas shipments was not in perpetuity and could be reviewed in the future.

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Criticism
India’s decision to halt wheat exports, at a time when prices are already skyrocketing, has drawn criticism from some countries.
Agriculture ministers from the Group of Seven industrialized nations condemned India’s decision to ban unapproved wheat exports in a joint statement.
“If everyone starts to impose export restrictions or close markets, it would worsen the crisis,” German Agriculture Minister Cem Ozdemir told a press conference in Stuttgart.
“We call on India to shoulder its responsibility as a member of the G20,” Ozdemir added.
Agriculture ministers would also “recommend” the subject be taken up at the G7 summit in Germany in June, which Prime Minister Narendra Modi has been invited to attend.
The official view
India’s wheat export ban is not a crisis-driven response, but a calculated measure to control domestic prices.
Speaking about the decision to ban the exports, BVR Commerce Secretary Subrahmanyam asserted that there was no wheat supply crisis in the country.
The official added that the government’s decision will help control rising domestic prices and meet the food needs of India’s neighbors and vulnerable countries.
Explaining the reasons for the decision, the Commerce Secretary said the main objective was to “control inflation”.

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“So what is the purpose of this order. What it is doing is in the name of prohibition – we are directing the wheat trade in a certain direction. We don’t want the wheat to go erratically towards places where it might just be hoarded or where it cannot be used for the purposes we hope it would be used for,” Subrahmanyam said.
Emphasis was also placed on ensuring sufficient availability of food stocks in the country.
“At the end of the day, food is a very sensitive element for every country because it affects everyone – the poor, the middle and the rich,” he said, adding that wheat flour prices had risen. increased in some parts of the country by about 40 percent.
Earlier, government sources said a ban on wheat exports would help crush “attempts by some foreign actors” to hoard Indian wheat for price manipulation in world markets.
(With agency contributions)



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