March 21, 2012

India likely to remove wheat product exports caps

As frequent policy changes in the past have scared away buyers, the Indian government is considering the removal of controls on wheat product exports, two senior government officials said Tuesday (Mar 20).

A ministerial panel scheduled to convene March 26 will likely consider a trade ministry proposal to scrap time limits and caps on quantities of wheat products that may be exported, the officials said. The meeting occurs ahead of a government-mandated deadline for the export of a limited volume of wheat products on March 31.

India, the world's second-largest wheat producer, opened up exports of wheat products in 2009 and has extended the deadline several times, as buyers have been reluctant to enter deals with Indian exporters given the potential for the flow of flour to be suspended by government fiat on short notice.

Exports between July 3, 2009 and January 23, 2012 totalled just 127,982 tonnes against the original 650,000-tonne limit, according to government data.

Denmark, Dubai, the Middle East, Indonesia, Sri Lanka, Nepal and the Maldives are usually the main buyers of Indian wheat products, such as semolina and wheat flour, which are used to make bread and bakery items.

The food ministry has proposed extending the current deadline for exports to March 31, 2013, while the trade ministry has argued against any limits.

Local flour mills have asked the government to put an export policy into place for at least three years to ensure that overseas buyers are assured continuous supplies as part of long-term contracts.