Ban on wheat exports: Government orders regional authorities to issue registration of contracts to wheat exporters

The government has instructed its regional authorities to issue registration of contracts to wheat exporters who have irrevocable letters of credit (LoC) so that they can comply with their contracts.

The direction came from the Directorate-General for Foreign Trade (DGFT), a department of the Ministry of Commerce dealing with exports and import-related matters, after the government banned the export of wheat but allowed the overseas shipments for which irrevocable LoC issued on or before May 13.

“All RA (regional authorities) under the DGFT are hereby required to issue Registration of Contracts (RC) to the exporters of wheat, preferably within a specified period of 24 hours, after the submission of the application, in full in all respects, by the exporters”, DGFT states: said in a trade announcement.

It added that wheat exports for humanitarian reasons such as aid / assistance / government-to-government should be allowed on a case-by-case basis with the specific approval of the competent authority.

India’s wheat exports reached a record high of 7 million tonnes worth $ 2.05 billion in fiscal year 2021-22 due to better demand for Indian wheat from abroad. Of the total wheat exports, about 50 percent of the shipments were exported to Bangladesh in the last fiscal year.

During the current fiscal policy, it is estimated that 4.3 million tonnes of wheat have been contracted for export so far.

Out of this, 1.2 million tonnes have already been exported in April and May, and a further 1.1 million tonnes are expected to be shipped, Trade Secretary BVR Subrahmanyam has said.

He has said that if an exporter has “a valid order – irrevocable letters of credit – that contract will be honored. So India’s credibility as a reliable supplier is maintained”.

Dr. VK Vijayakumar, Chief Investment Strategy at Geojit Financial, said: “The government’s target of exporting 10 million wheat in FY23 and exploiting the sharp rise in global prices was well thought out. But the unexpectedly severe heat wave affected production and triggered increases in spot prices of wheat.”

As inflation in April stood at 7.79 percent and food inflation at 8.38 percent emerges as major concerns, the priority should be to control the domestic price of wheat rather than targeting export earnings, said market analyst Dr. VK Vijayakumar in his comment.

He added: “This could be problematic for long-term exports, which require policy stability. But the current priority should be to control domestic prices by ensuring adequate availability.”

(With PTI inputs)