August 12, 2013
India approves two million tonnes of wheat exports
India's Cabinet Committee on Economic Affairs (CCEA) has approved the export of 2 million tonnes of wheat, at a floor price of US$300/tonne.
Stocks from the godowns of Food Corporation of India (FCI), the country's main food management agency, will be exported by State Trading Corp. of India Ltd, MMTC Ltd and Projects and Equipment Corp. of India Ltd.
"Similar procedure will be followed for this export as was done earlier for export of 4.5 tonnes of wheat", a CCEA note stated.
According to the CCEA, the exports will make way for fresh food grain in FCI's godowns and improve proper management of stocks.
"On the other hand, apart from earning additional revenue, the storage and handling cost of about US$4 million per 100,000 tonnes of wheat per year incurred by FCl will be saved for the quantity exported," the CCEA said.
The government's move, however, could end up being a nonstarter, said Amnish Aggrawal, analyst at Motilal Oswal Financial Services Ltd, as international prices of wheat at US$240/tonne are lower than the base price of US$300/tonne set by the government.
The government had exported 4.5 tonnes of wheat at lower than the cost price, thus incurring an estimated loss of over US$280 million, he said.