Indian government may remove controls on wheat exports

22-Mar-2012 - Last updated on 22-Mar-2012 at 17:31 GMT

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India considers removing its wheat export controls

India may soon see a final policy move that would lead to the government stepping back and removing its controls on the exports of wheat products, a move that until now has been a utopian dream for local farmers and millers.

The country’s administration gad first announced the removal of controls and opening up of wheat products market back in 2009. India has allowed up to 650,000 tonnes of wheat product exports until March 31.

Now, government sources have confirmed to FoodNavigator-Asia that a joint ministerial panel would meet on March 26 to consider a proposal to scrap time limits and caps on quantities of wheat product exports.

“The meeting will see officials from the ministry of commerce, agriculture, and finance meet. The time limits and caps would be discussed,” an official at the Ministry of Consumer Affairs, Food, and Public Distribution told FoodNavigator-Asia on the condition of anonymity.

“One of the sector demands that might be discussed is for an export policy to that would assure overseas buyers of continuous supplies under long term contracts. I cannot confirm the agenda beyond that,” he said.

Local media has reported that the proposal has a strong opponent and proponent each - the food ministry wants the deadline to be extended to March 31, 2013. The trade ministry however has argued against any limits.

India used to restrict wheat exports as the grain is a major component of the public distribution system, that lets lot of the lower and middle
classes buy food grains and essential food products cheaply.

Removal of controls was long lobbied for by economists and protested equally by politicians, since a shortage could give rise to inflation and impact a major chunk of the voter demographic.

This proposal is significant as buyers, even after the 2009, have been reluctant to enter into deals with Indian exporters, given the potential for exports to be suspended by the government on short notice on the account of inflation.

According to data from the commerce ministry, India exported only 127,982 tons of wheat products against the original 650,000-ton limit between the middle of 2009 and the end of 2011.

If controls are removed, countries like Denmark, UAE, Indonesia, and Sri Lanka would stand to gain the most since bakery companies there are usually the main buyers of Indian wheat products, such as semolina and wheat flour.