The Centre is considering restricting shipments of wheat products such as atta (flour), maida and sooji (semolina) as there has been a sudden spike in their export volumes.

“There is no decision as yet. But both (wheat and its products) are interlinked as wheat is consumed only after processing into a certain product. There is a need to be some degree of precaution so that wheat does not end up as wheat products and shipped out of the country,” a senior official in a key decision-making industry said.

The development comes a month after India banned wheat exports to meet the demand of its domestic market, neighbouring countries and vulnerable nations.

UAE move to ban re-exports

Traders said rumours have been doing rounds on the ban for over a week now. They said the United Arab Emirates move today (Wednesday) to ban re-exports of Indian wheat and flour was a clear signal of the Indian move as relations between both nations were good. 

Delhi-based exporter Rajesh Paharia Jain said wheat flour exports had increased sharply after India banned wheat exports on May 13. 

According to Commerce Ministry data, India exported 95,094 tonnes of wheat flour worth  ₹314 crore in April 2022 against a record of about 5.66 lakh tonnes worth ₹1,842 crore in the entire 2021-22 fiscal (50,000 tonnes a month). In 2020-21, 2,78 lakh tonnes of wheat flour were shipped out, while in 2019-20 the volume was 1.99 lakh tonnes. 

Sandeep Bansal, Director of Kanpur-based Grain Flour India Pvt Ltd, wheat flour exports had more than trebled since the wheat export ban. 

Traders in fray

“Wheat prices have declined after the ban and this had made exports of flour feasible even if an importing nations was to levy 70 per cent Customs duty,” said Jain.

Bansal said flour demand had increased since traders had entered the fray, looking for margins. However, he said, no multinational firm was into exports of wheat flour. 

“Even Indian flour mills are exporting only in small quantities of 1,000-1,500 tonnes,” said Jain. 

Most of the wheat shipments are headed to South-East and West Asia. However, a Madhya Pradesh mills exports branded wheat flour to the US.

“Wheat flour has limited shelf life compared to wheat. So, it can be shipped to far-off places,” said an export-import official of an international trading firm. 

According to traders, Indian wheat flour is quoted at between $350 and $400 a tonne. But another trader said wheat flour is supplied at ₹26,000-27,000 a tonne to exporter. 

Low output, procurement

India had banned wheat exports after its production was affected by a heatwave that swept across the country during March-April, while the Food Corporation of India (FCI) was unable to mop up ample stocks for buffer stocks.

According to the Ministry of Agriculture, the production of wheat is estimated at 106 million tonnes, down from initial projections of a record 111.32 mt. The FCI procured less than 19 mt against 43.33 mt procured last year. 

The FCI was unable to procure for the buffer stocks as open market prices ruled higher than the minimum support price of ₹2,015 a quintal. This was in view of export demand for wheat with 1.4 mt being shipped out in April alone. 

The national weighted average modal price (rates at which most trades take place) for wheat is currently ₹2,040, down from over ₹2,200 before the ban.