India has banned the export of wheat, abruptly reversing its policy of sending shipments across the world to address the global food shortage. The move comes in the wake of the projected large drop in foodgrain production especially due to the scorching heat and a sharp rise in domestic food prices. India’s sanctions are expected to prop up global food prices, which have swelled wheat supplies to record levels after the Ukraine crisis.
India was expecting exports in large quantities as the government estimated a record production of 111 million tonnes of wheat in February. A month-long heatwave from mid-March shrank it. The government had to cut the production estimate by at least 5.7% i.e. 105 million tonnes.
The central government issued a notification on Friday night, imposing a complete ban on fresh exports. Earlier, Prime Minister Narendra Modi had said that India is ready to feed the world.
Wheat prices have reached record levels. There is an increase of 6.95% in April, which is a decade high due to lower production and procurement by private traders at more than the government-set MSP 2015 per quintal.
The low production has put pressure on the government to meet its requirement of grain for subsidized cereals. The unexpected fall in production has forced the government to reduce its wheat procurement target from 44 million tonnes to just 19.5 million tonnes. Just a week ago, Food Secretary Sudhanshu Pandey had said that the country was stocked and did not see any possibility of curbing wheat exports.
India’s estimated wheat production this year remains in a state of confusion as the scorching heat in mid-March cut yields. The country Ukraine was hoping to export in large quantities to meet the global shortage caused by the war.
India’s consumer inflation reached an eight-year high of 7.79% in April 2022. According to official data, food inflation rose to 8.38%, the highest ever this fiscal.
An emerging issue, according to analysts, is whether India can export wheat without any restrictions and whether domestic food prices in the country will rise further.
India exported a record 7.85 million tonnes in the financial year to March, up 275% from a year ago. Analysts said lower production now could lead to a supply crunch in the coming months.