The initiative appeared against the backdrop of rising domestic prices.
Even before the events of February 2022, India planned to expand the geography and increase the volume of wheat exports.
The country is the world’s largest producer of wheat after China. The share in global production is 13.5%.
India produces more than 107 million tons of wheat annually, but most of the crop goes to domestic consumption.
In the world market, the share of India as an exporter of the most significant grain crop was not so high — about 1%.
Bangladesh was the main overseas consumer of Indian wheat in 2021. Also among the importing countries were Nepal, Sri Lanka, Yemen, Afghanistan, Qatar, UAE, Oman, Indonesia and Malaysia.
It should be noted that the volume of Indian exports in 2021 increased sharply: from 1.12 million tons (2020) to 6.12 million tons, and in 2022 the country planned to supply 10 million tons to world markets if logistics and other issues are resolved.
The events that took place in February 2022 led to some difficulties and changes in the global wheat export market: the export of grain from Ukraine at that time practically stopped, and export from Russia came under sanctions pressure.
India immediately announced that it was ready to replace the falling volumes of wheat exports on the world market and even entered into preliminary agreements with Egypt.
At that time, Russian analysts were cautious about the statements of the Indian side, taking into account the fact that, firstly, India’s export potential was previously limited by pricing policy, and secondly, not excluding global climate change.
It was the influence of the climate, in the first place, that prevented the plans of the Indian government from being realized.
The heat wave that began in March (the highest on record) damaged a significant portion of wheat crops.
Yields in some areas of the country fell to 50%.
At the same time, global grain prices were reaching record highs, and food producers in Africa began looking for cheaper grain replacements by adding rice, sorghum and cassava flour to breads, baked goods and pastas.
Taking into account various factors and striving to ensure the country’s food security, the Indian authorities decided to limit the export of wheat.
But domestic prices in the country continued to grow.
Given this fact, the government of the country plans to introduce duty-free imports of wheat (at the moment, imported grain is subject to a duty of 40%), to limit Indian traders the volume of wheat reserves allowed for storage, for external supplies of some wheat processing products from August 14 will be special permission required.
These measures, including price cuts on the global market, should make imports more attractive and balance prices on the domestic market, according to the Indian authorities.
