The government has decided to restrict flour exports, as an irrational spike in outbound shipments of the wheat by-product over the past few days has threatened to undermine its ban on wheat dispatches.
Only seasoned players who have good track record of shipping out wheat flour could be allowed to export it, a source told FE. A notification is expected anytime now. However, flour exports won’t be banned.
As FE reported last week, wheat flour exports witnessed a sudden and unusual surge in the aftermath of the ban on the outbound shipment of wheat on May 13, indicating that many traders may be using this route to beat the prohibition on the grain’s exports.
Sources in the milling industry had said wheat flour exports might have jumped at least 7-8 times sequentially since the wheat export ban was imposed. Usually monthly exports at this time of the year are about 6,000-8,000 tonnes. However, flour dispatches since the wheat export ban could have easily hit 1 lakh tonnes.
To be sure, flour exports were neither banned nor restricted when wheat shipments were prohibited last month.
In value term, exports of wheat or meslin flour jumped 64% last fiscal from a year before to $247 million, according to the DGCIS data. In contrast, wheat exports had jumped 274% in FY22 to $2.12 billion.
“There is a buzz that some traders may be using this route to bypass the wheat export ban. However, a lot of orders are also flowing in to genuine flour millers, probably as a consequence of the wheat export ban,” a flour miller had told FE last week.
Earlier this month, commerce, industry and food minister Piyush Goyal had warned traders of action if they were found to have used illegal, back-dated letters of credit (LCs) to seek permits to ship out wheat.
While prohibiting wheat export to control spiralling prices, the government had made it clear that supplies that are backed by LCs issued before the ban would to be allowed.
Apart from allowing exports that were already backed by LCs, senior government officials had made it clear that India would also cater for the genuine need of neighbouring countries and food-deficit nations through government-to-government deals and honour supply commitments already made.