The Economic Committee of the Cabinet chaired by Prime Minister Shri Narendra Modi has approved a proposed change in policy to exempt wheat or meslin flour (HS code 1101) from export restriction/ban.
Impact: The approval will now allow the export of wheat flour to be limited, which will ensure that wheat flour price increases are limited and ensure food security for the most vulnerable sections of society.
Implementation: The Directorate General of Foreign Trade (DGFT) will issue a notification to this effect.
Background: Russia and Ukraine are the main exporters of wheat accounting for approximately 1/4 of the global wheat trade. The conflict between them has led to a disruption in the global wheat supply chain increasing the demand for Indian wheat. As a result, the price of wheat in the domestic market increased. To ensure food security for the country’s 1.4 billion people, a decision was taken in May 2022 to ban wheat exports.
However, due to the ban on wheat exports (which was done to check rising prices in the domestic market and ensure food security in the country), the demand for wheat flour in foreign markets increased and its exports from India saw a growth of 200% during April-July 2022 compared to corresponding period in 2021.
The increased demand for wheat flour in the international market has led to a significant increase in wheat flour prices in the domestic market. Previously, there was a policy of neither banning nor restricting the export of wheat flour. Therefore, a partial modification of the policy by lifting the exemption from the export ban/restriction on wheat flour was called for to ensure food security and check rising prices of wheat flour in the country.
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