India to relax wheat export ban

Move to be implemented after elections.

India will lift a two-year ban on wheat exports once the general election process wraps up, said the Union commerce secretary.

“The group of ministers (GoM) had taken a decision to allow two million tonnes of wheat for exports. The process is underway. The exports will be allowed after elections,” said G K Pillai, commerce secretary, on the sidelines of a Federation of Indian Chamber Of Commerce and Industry (Ficci) function.

However, there were no plans to allow non-basmati rice exports, he said. The government had banned the export of wheat in February 2007 and that of non-basmati rice in April last year, to plug a shortage in production and contain a rise in prices.

However, the situation has reversed, with stockholding levels mounting, and traders are demanding an easing of the export ban to bring down the inventories. India is the second-largest wheat producing nation in the world.

According to a report by the International Grains Council, an intergovernmental one concerned with the trade, global wheat stocks are at an eight-year high, at 171 million tonnes. And, low imports have led to depressed world wheat prices. Under such a scenario, private companies are not procuring wheat from the domestic market for exports, the report added.

The next round of World Trade Organization negotiations, the Doha Round, is likely to happen only by February 2010, as Western governments are grappling with their ongoing economic crisis, said Pillai.

But the US government might try to reopen earlier agreed issues, as it feels it did not get additional market access for its products. “The current line of thinking in the US is that it has given too much in the negotiations and received too little, that there is little new market access in the package so far negotiated and there is a lack of transparency on market access,” added Pillai.

The agenda seems to hint at a push for more market access in agriculture, non-agricultural products and services, particularly from key advanced countries like the US and the European Union (EU).

“Such signals leave us worried that the new US administration might not be willing to proceed on the basis of the Doha mandate. Instead, it may attempt to ‘reopen’ the negotiations, or include ‘new areas’ into the negotiating agenda. This is simply not acceptable to us,” said Amit Mitra, president of Ficci.

The Doha trade talks had failed in July 2008, with India and the US unable to resolve differences on the Specific Safeguard Mechanism (SSM), which outlines norms that allow developing and poor countries to impose additional duties on farm products if there is a surge in farm imports, so that domestic farmers are not affected.

The consensus at the Ficci discussion was that a multilateral trade body like the WTO is in the best interest of India and the Doha talks should not be allowed to collapse.