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Will take strict action against wheat exporters on fake, back-dated letters of credit, says Piyush Goyal

“We will meet the food security needs of less developed countries by allowing wheat exports on a case-by-case basis, ”Goyal said in an interaction with select media persons.

The wheat export ban is not applicable to two kinds of shipments — exports committed by the Indian government under bilateral understanding with a few countries to meet their food security needs and shipments under transitional arrangements, where irrevocable LCs have been issued prior to the ban.
The wheat export ban is not applicable to two kinds of shipments — exports committed by the Indian government under bilateral understanding with a few countries to meet their food security needs and shipments under transitional arrangements, where irrevocable LCs have been issued prior to the ban.

The government will take strict action against the exporters who had created fake, back-dated letters of credit (LCs) to circumvent the ban on wheat exports imposed on May 13, Union minister for commerce, industry and food Piyush Goyal said on Friday.

“We are investigating all possibilities of any exporter who tried to game the system,” he said. While prohibiting wheat export last month to control spiralling domestic prices, the government had made it clear that shipments that are backed by LCs issued before the ban was announced would be allowed.

Goyal said the Inter-Ministerial Committee consisting of the finance, food, agriculture and road transport ministers is currently examining allowing wheat exports on a government-to-government (G2G) basis. Sources said several countries such as Bangladesh, Indonesia, the UAE, South Korea, Oman and Yemen have approached India for wheat imports under bilateral arrangements between governments.

The wheat export ban is not applicable to two kinds of shipments — exports committed by the Indian government under bilateral understanding with a few countries to meet their food security needs and shipments under transitional arrangements, where irrevocable LCs have been issued prior to the ban.

“We will meet the food security needs of less developed countries by allowing wheat exports on a case-by-case basis, ”Goyal said in an interaction with select media persons.

Earlier in the week, the directorate general of foreign trade (DGFT) had warned wheat exporters that it would examine cases for referral to the Central Bureau of Investigation (CBI) and the Economic Offences Wing (EOW) if they are found to be using back-dated LCs to illegally get permits for outbound shipment of the grain.

FE had recently reported that exporters had submitted LCs to seek permits for despatches of over one million tonnes (MT) of wheat, way above the initial trade estimate of just about 0.4 MT, leading to suspicions of attempts by unscrupulous elements to abuse the LC route.

According to trade sources, more than one MT of wheat is still lying at Kandla port, Gujarat for exports as DGFT is currently checking all the LCs.

On reports about an Indian wheat consignment being rejected by Turkey, Goyal said the concerned consignment was found to be exported by ITC Limited to Netherlands which was diverted to Turkey without the company’s knowledge. “India’s wheat is of good quality and the country that rejected it has never done trade with India in this product,” he said.

As the production of wheat has declined following heat wave conditions in March, the government had to curb exports to improve domestic supplies. Agriculture ministry revised wheat production for the 2021-22 crop year (July-June) to 106 MT from its February’s estimate of 111 MT.

India exported a record 7 MT of wheat worth $2 billion in FY22, against just 2.1 MT worth $ 0.55 billion in FY21.

After the export ban was imposed, Food Corporation of India tried to procure wheat again and could only get 0.6 MT so farmers had already sold their produce. FCI’s wheat procurement drive for the current year fell by more than 54% to 18.66 MT till Friday from the year-ago level.

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