India bans export of maida, suji, wheat flour: Why now?

As wheat prices continue to rise in the international markets, the government has imposed restrictions on the export of wheat products ahead of the festive season when prices shoot up. The Centre is taking calibrated steps to check inflation as global prices do not seem to let up soon.
Centre checks prices

The government has been monitoring the prices of commodities closely. It had checked the export of sugar, besides wheat, in order to curb rising costs amid biting inflation. Reports said that wheat prices in India recently rose about 14 per cent in one and a half month.

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After restricting wheat export for profit in May this year, the government has imposed restrictions on export of maida, semolina and all variants of wheat flour (atta) from August 14. It was speculated that the export ban on wheat would prompt similar actions on its products but that was paused for a few months. Last month, the Centre had restricted the export of plain atta amid the global disruption in wheat supply. It has now swept in to control the prices of wheat derived products amid speculation that their cost may rise ahead of the festive season.
The export of wheat flour, maida, samolina (rava/sirgi), wholemeal atta and resultant atta remains free but will be subject to recommendation by the inter-ministerial committee and quality certification by the Export Inspection Council or its EIAs (export inspection agency) at Delhi, Mumbai, Chennai and Kolkata.
The Directorate General of Foreign Trade (DGFT) said, “Global supply disruptions in wheat and wheat flour have created many new players and has led to price fluctuations and potential quality-related issues. Therefore, it is imperative to maintain the quality of wheat flour exports from India.”
Between the period of August 8 to 14, only such consignments will be allowed to be exported which had commenced loading on ships before the notification and in cases where the consignment had been handed over to the Customs before the notification and is registered in their system.
The government has been monitoring the prices of commodities closely. It had checked the export of sugar, besides wheat, in order to curb rising costs amid biting inflation. Reports said that wheat prices in India recently rose about 14 per cent in one and a half month.
The high demand from millers as well as supply issues due to monsoons hiked wheat prices, according to reports. Big companies and traders were reportedly holding on to stocks expecting prices to rise further, while small farmers and traders had sold out their stocks.
India’s wheat flour exports have also been rising sharply in FY22 in tandem with wheat exports. However, until now, the government had not moved to curb their sales in foreign markets largely because wheat products are semi-perishable in nature. Wheat products have a shelf life of a few months while flour, when stored under the right conditions, lasts 6-8 months. Wheat as a raw commodity can last longer. Their life span is extended by storing them in jute bags in godowns where they can remain up to a period of three years. If periodic pest control is undertaken then the physical and chemical qualities of the grains is preserved.
Meanwhile, to correct the rising prices of wheat, the government is mulling to slash 40 per cent duty on wheat imports and cap the amount of stocks traders can hold. Officials told Reuters that even though the government has taken steps to dampen wheat prices, globally, wheat is selling at much higher rates than the domestic price. Currently, it is unviable for traders to import wheat. With the import duty gone, they may consider buying wheat from foreign markets ahead of the festive season when domestic prices shoot up.
India, which is self-sufficient in wheat, last imported the commodity in the 2017/18 (April-March) financial year.
The Food Corporation of India does not have wheat for millers or to intervene in the market this year after procurement dropped 57 per cent on account of low yield of the crop and traders flocking to sell in the foreign markets.
A dealer, speaking to Reuters said: “New crop would become available only after 9 months. The government has to use stocks very carefully until then to avoid any shortage.”
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