Wheat Export Ban: Government directs regional authorities to issue registration of contracts to wheat exporters

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

The direction came from the Directorate General of Foreign Trade (DGFT), an arm of the commerce ministry that deals with exports and imports-related matters, after the government banned wheat exports but allowed the overseas shipments for which irrevocable LoC issued on or before May 13.

"All RA (Regional Authorities) under the DGFT are hereby directed to issue Registration of Contracts (RC) to the exporters of wheat, preferably within a prescribed time limit of 24 hours, on submission of application, complete in all respects, by the exporters," the DGFT has said in a trade notice.

It has added that the wheat export on humanitarian grounds as aid/assistance/ government-to-government shall be allowed on a case-to-case basis, with the specific approval of the competent authority.

India's wheat exports stood at an all-time high of 7 million tonnes, valuing USD 2.05 billion, in 2021-22 fiscal year on better demand for Indian wheat from overseas. Of the total wheat exports, around 50 per cent of shipments were exported to Bangladesh in the last fiscal.

During the current fiscal, as per estimates, 4.3 million tonnes of wheat have been contracted for exports so far.

Out of this, 1.2 million tonnes have already been exported in April and May, and another 1.1 million tonnes are expected to be shipped, commerce secretary B V R Subrahmanyam has said.

He has said that if an exporter has "a valid order -- irrevocable letters of credit -- that contract will be honoured. So, India's credibility as a reliable supplier is maintained".

Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Financial said, “The government's goal of exporting 10 million wheat in FY23 capitalizing on the sharp rise in global prices was well-conceived. But the unexpected severe heatwave impacted production, triggering spikes in wheat spot prices.”

Since inflation in April stood at 7.79 per cent and food inflation at 8.38 per cent are emerging as major worries, the priority should be to control the domestic price of wheat rather than target export earnings, the market analyst Dr. VK Vijayakumar said in his comment.

He added, “This can be problematic for long-term exports which need stability in policy. However, the present priority should be to control domestic prices by ensuring adequate availability.”

(With PTI Inputs)