May 19, 2012

 

India may ship wheat to Iran, Gulf countries

 

 

The Indian government is working on a proposal to transport wheat to Iran and Gulf countries, in a bid to lessen massive wheat supplies which surpass the necessity for strategic reserve and buffer stock norms.

 

Due to a record wheat output at 90 million tonnes this year, the Food Corporation of India (FCI) already has wheat stocks close to 40 million tonnes, which has resulted in acute storage crisis.

 

"There is a (government) proposal now of exporting wheat to Iran," said PMEAC chairman C Rangarajan at a seminar. The government plans to improve its overall exports to Iran, he said.

 

"We have got queries for exporting wheat up to three million tonnes. This is likely to be purchased by Iranian government agencies as well as private importers," an official source told FE.

 

After lifting export restrictions in September last year, India has already exported more than 6 lakh tonnes of wheat to countries like Bangladesh, UAE, Nepal, Thailand and other countries. India is looking at exporting 10 million tonnes of wheat to various countries because of excess stocks.

 

Official sources said that the key aim behind wheat exports to Iran will not only create more storage space for the grain but also reduce trade deficit between two countries.

 

India imports US$12 billion worth of oil from Iran annually, while Iran imports 75% of its rice requirements from India.

 

Due to sanctions imposed by US, payment settlement has become a critical issue in the bilateral trade.

 

In 2007-08, Iran imported an estimated 8 million tonnes of wheat due to poor harvest. Apart from wheat, Iran is also looking at importing other food items such as sugar, tea and basmati rice from India

 

Meanwhile food minister KV Thomas also confirmed receiving wheat exports proposal and said, "We are looking at export of wheat from our stocks. Countries like Uganda, some Gulf nations, Afghanistan and Pakistan need wheat."

 

As reported by FE earlier, the country's grain stocks held with the FCI and state government owned procuring agencies has crossed all time record of 71 million tonnes at the start of this month mainly attributed to record rice and wheat procurement drive.

 

FCI, the nodal agency for the procurement and distribution of grain, expects to purchase nearly 31.8 million tonnes of wheat in this rabi marketing season of 2012-13.

 

The government has capacity to store only 66 million tonnes of wheat and rice. To ease pressure on storage, the government is also considering releasing wheat and rice in the open market and through ration shops.