The Cabinet Committee on Economic Affairs, chaired by Prime Minister, Narendra Modi, has approved the proposal to amend the exemption policy for Wheat or Meslin Flour (HS Code 1101) from export restrictions/ ban.

Impact

The approval will now allow putting a restriction on the export of Wheat Flour which will curb rising prices of wheat flour and ensure food security for the most vulnerable sections of society.

Implementation

Directorate General of Foreign Trade (DGFT) shall issue a notification to this effect.

Background

Russia & Ukraine are the major wheat exporters, accounting for around 1/4th of the global wheat trade. The conflict between them led to the global wheat supply chain disruptions increasing the demand for Indian wheat. As a result, the price of wheat in the domestic market increased. To ensure the food security of 1.4 billion people in the country, the decision was taken to prohibit wheat export in May 2022.

However, due to the prohibition on the export of wheat (which was done to put a check on increasing prices in the domestic market and to ensure food security in the country), the demand for wheat flour has risen in foreign markets and its exports from India have registered a growth of 200% during April-July 2022 compared to the corresponding period in 2021.

The increased demand for wheat flour in international market led to the significant price rise of wheat flour in the domestic market.

Earlier, there was a policy not to prohibit or restrict the export of Wheat flour. Therefore, a partial modification of the policy was required by withdrawing the exemption from ban/ restrictions on the export of Wheat Flour to ensure food security and check the mounting prices of Wheat flour in the country.