The United Arab Emirates’ (UAE’s) decision to impose a four-month moratorium on the export of wheat and flour, including those from the country’s ‘free zones’, is aimed at ensuring uninterrupted domestic supplies and avoiding diversion of grain to other countries.
Free zones in UAE are used as international transit hubs, where products originating from India and other countries are re-exported.
“The move by UAE authorities is meant to check re-exports of wheat intended for domestic consumption,” Kunal Shah, partner, Kunal Corporation, a Mumbai-based exporter, told FE.
The ban by the UAE on re-exports is also meant to ensure that the shipments approved by Indian authorities on a bilateral basis after New Delhi’s May 14 ban on wheat exports are actually used by UAE consumers.
Out of India’s total exports of 2.08 million tonne (mt) of wheat in 2020-21, the shipment to the UAE was only 0.18 mt.
According to an Emirates News Agency report on Wednesday, the UAE’s ministry of economy stated that the decision to halt exports of wheat comes in view of the international developments that have affected trade flows. The move is also in sync with strategic relations that bind the UAE and India, especially after the signing of the Comprehensive Economic Partnership Agreement between the two countries and the Indian government’s approval to export wheat to the UAE for domestic consumption.
The UAE’s economy ministry also stated that those companies wishing to export or re-export wheat and flour varieties of Indian origin, which were imported into the country prior to India imposing a ban on wheat shipments on May 14, have to seek permission to export outside the UAE.
Citing domestic supply constraints because of lower output, India had banned wheat exports on May 14 and allowed exports of those consignments which were issued letters of credits and to countries seeking to ensure food security. Trade sources said that India has allowed shipments of more than 0.46 mt of wheat since the ban on exports was imposed.
Currently an inter-ministerial committee consisting of the finance, food, agriculture and road transport ministers is examining allowing wheat exports on a government-to-government (G2G) basis. Several countries such as Bangladesh, Indonesia, the UAE, South Korea, Oman, Yemen and Ethiopia have approached India for wheat imports under bilateral arrangements between governments.
India exported a record 7 mt of wheat worth $ 2 billion in 2021-22, against just 2.1 mt worth $0.55 billion in 2020-21.
As India’s wheat production had declined following heat wave conditions in March, the government had to curb exports to improve domestic supplies. The agriculture ministry revised wheat production for the 2021-22 crop year (July-June) to 106 mt from its February’s estimate of 111 mt.