The Government of India has banned the export of wheat with immediate effect, considering the need for the support of neighbouring countries to manage the country’s overall food security. The government has placed the export of wheat in the “prohibited” category.
Reasons:
- A rise in global prices for wheat was threatening the food security of India and neighbouring and vulnerable countries.
- A key aim is to control rising domestic prices. Global wheat prices have increased by more than 40% since the beginning of the year.
- At the same time, India’s own wheat harvest has suffered a record-breaking heatwave that is stunting production.
- High consumption needs: Even though it is the world’s second largest producer of wheat, India consumes most of the wheat it produces.
- India’s vast stocks of wheat – a buffer against famine – have been strained by distribution of free grain during the pandemic to about 800 million people.
Exceptions:
- India has allowed export on the basis of permission granted by it to other countries to meet their food security needs and based on the request of their governments.
- Another kind of shipments to be allowed are in cases where “irrevocable letter of credit has been issued on or before the date of this notification (May 13), subject to submission of documentary evidence”.
Impact:
- The government’s decision to ban wheat exports will help in crushing attempts by certain foreign players to hoard Indian wheat for price manipulation in global markets
- This export ban is a pre-emptive step and may prevent local wheat prices from rising substantially due to supply availability in domestic market.
- If India’s wheat ban leads to higher price of substitutes like rice, then there could be upward pressure on other food prices.
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