India restricts exports of flour and derivatives

According to a notification from the Directorate General of Foreign Trade (DGFT), the decision will come into effect on, 12 July 2022.

Global supply disruptions in wheat flour and wheat grain have led to price fluctuations and potentially some quality-related issues with the wheat grain. While there is no complete ban on the wheat export policy, exporters must seek permission from an Inter-Ministerial Committee on all wheat exports.

The DGFT notification, issued on 6^th July 2022, mandates that all exporters seek prior permission from the inter-ministerial committee on any wheat export before the outbound shipment.

In May 2022, the Centre amended the export policy for wheat by putting its export under the “prohibited” category.

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Before the revised policy

According to reports, India exported almost 96,000 tons of wheat flour in April 2022, up from 26,000 tons in the same period last year.

Before 12^th July, specific consignments of wheat flour can be exported, including possible situations wherein the loading of wheat flour on the ship commenced before this notification, and where the wheat flour consignment has been handed over to the Customs and is registered within their system (Between July 6^th and July 12^th, shipments where loading on the ship had started before July 6^th).

Wheat consumption and allocation

On 4^th May, the Centre announced a cut in wheat allocation under the Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY) until September 2022. This cut is estimated to save approximately 55 lakh tons of wheat.

There has been a gradual decline in per capita cereal consumption in India in the previous months. As for wheat, against the national average monthly per capita consumption of 4.288 kg (rural) and 4.011 kg (urban), consumption was higher in Uttar Pradesh, Madhya Pradesh, Bihar, New Delhi and Maharashtra, and lower in Odisha, West Bengal and Tamil Nadu.

The main reason for the reduction in cereal consumption results from lower procurement than last year. During the rabi marketing season (RMS 2022-23), 187.89 lakh tons of wheat has been procured till July 4^th, which is 56.65% lower than the 433.44 lakh tons of wheat procured in the entire RMS 2021-22. This has been the trend across Punjab, Haryana, Madhya Pradesh and Uttar Pradesh, the states that contribute the most to the country’s food basket.

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Conclusion

The Indian government stated that this move was made to manage the country's overall food security and meet the needs of the neighboring or other vulnerable nations.