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

Impact:

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

Implementation:

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

Background: 

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

However, due to prohibition on export of wheat (which was done to put a check on increasing prices in domestic market and to ensure food security in the country), the demand for wheat flour has increased in foreign markets and it’ s 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 significant price rise of wheat flour in the domestic market.

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

Export restrictions on wheat flour enable regulatory controls to curb domestic price rises and protect food security. Amendment withdraws the prior exemption permitting export of Wheat or Meslin Flour (HS Code 1101), enabling imposition of export restrictions or a ban; the Directorate General of Foreign Trade (DGFT) will issue a notification to implement the modified policy to curb rising domestic prices and protect food security.