Will India seize wheat export contracts that Russia and Ukraine have missed?



Goods carts with newly harvested wheat sacks from the north are currently arriving in a rush at Kandla port. They'll need to unload and reload.

The conflict in Ukraine is certainly affecting domestic fortunes. Wheat is currently being purchased at Kandla port for well than Rs 2,400 a quintal, up roughly Rs 300 from a week ago. The administration's MSP per quintal is Rs 2,015, however, the market price is Rs 2,015 per quintal.

As a result, everybody benefits. Farmers are ecstatic because they have begun to receive greater wheat prices as compared to what the administration had been providing them just a few weeks ago. The administration is relieved since it would need to purchase less wheat and its subsidy payment would be reduced.

Although being the world's 2nd largest producer of wheat, India represents less than 1% of global wheat exports. Ukraine and  Russia are key wheat providers, responsible for around 30% of the world supply.

Wheat exports via Russia have come to a screeching standstill, and economic activity in Ukrainian ports has come to a standstill as a result of the hostilities between the two countries. This has created a void, which India is attempting to fill.

Prime Minister of India, Narendra Modi has stated that India must take advantage of the chance to sell high-quality wheat if demand rises as a result of Russia's assault on Ukraine.

And it looks that the administration and other relevant authorities have decided to take action. This happened at a time when wheat exports from India have indeed been increasing at a rapid rate over the last few years.

Let's take a look at where they're going, what steps are being made to help them, and who the important actors are.

Considerable steps would be taken in the coming weeks, as per an official report citing anonymous administration officials, to position India as a prominent exporter of elevated quality wheat.

Well over two weeks, three key initiatives would be executed. The first step is to verify that the grade of wheat for export is evaluated by government-approved labs. The second step is to make sure that more rail waggons are accessible for transportation. The third includes negotiating with port officials to give wheat shipments precedence.

According to trade and market experts, India's inaugural wheat stockpiles in the central pool as of the 1st of April, 2022 are likely to be the poorest in the past three years.

However, they would remain much beyond the level necessary to sustain a strategic reserve and buffer.

Wheat exports are expected to be approximately 7.25 million tonnes in the Financial Year 2022, according to both administrations as well as trade sources. This will be an all-time high. If the present pace is continued, shipments could reach 10 million tonnes in the following fiscal year. This also assumes that international market dynamics stay stable and that export shipments are not delayed.

And this is a great chance that comes at a point when the wheat flour exports of India are already on the rise. The wheat exports of India exceeded 872 million dollars during 2021-22 April-October, as per the Ministry of Commerce and Industry. In 2020, they had reached a total of 243 million dollars, up from 50 million dollars during 2016.

Indian wheat is now the least expensive among other worldwide rivals. This is welcome headlines for the private industry, which has recently increased its efforts to increase wheat exports. ITC handled approximately half of the approximately 7.25 million tonnes of exports during the Financial Year 2022.

Meanwhile, the remaining funds have been distributed among a group of global trade corporations, including Cargill and Olam Agro.

Therefore, what are the obstacles that Indian traders would have to overcome if they wish to export record volumes? Aside from unexpected shifts in international markets, one of the few major impediments to attaining exports of 10 million tonnes upcoming year is if the administration restricts exports to meet the yearly wheat purchase objective for the Financial Year 2023.

Nevertheless, many experts told to the journalists that if private operators maintain to demonstrate an interest in wheat, the Government may not have to buy the entire goal in the fiscal year. Smaller wheat acquisition, combined with reduced carryover stockpiles, will undoubtedly affect the food subsidies for the Financial Year 2023, which is largely made up of wheat.

As per one of the sources, commissioning brokers and dealers in various regions of the nation are requesting tax exemption in an attempt to take advantage of the chance. Food retailing behemoths and foodgrain exporters, for instance, have allegedly approached merchants in Punjab.

However, even though demand rises, hefty taxes may be a hindrance. Take into account the 3% marketplace fee and 1% rural improvement fund they must deal with, as well as the 2.5 per cent fee to brokers and 1% processing fee.

As a result, according to Prime Minister of India, Narendra Modi, Indian exporters possess a great chance to serve the world with the highest quality goods and the finest service. It must not be a temporary solution; instead, Indian exporters must render it permanent and increase Indian wheat exports to more than 15 million tonnes each year.


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