India To Consider Russian Wheat Imports At Discount, In Order To Calm Prices
India-Russia talks are on the way about importing wheat at a discount as a measure to boost the supply and to control food inflation ahead of national and state elections coming next year, Reuters reported.
This move is expected to aid New Delhi in effectively intervening in the wheat prices to bring it down, the prices had fuelled inflation to a 15-month high in July. The government is trying both, government to government deals and through private trade deals to import wheat.
Importing wheat by the government is one of the supply side measures by the government to ease inflation. This is expected to bring down the prices of major commodities like fuel, cereals and pulses and the next measure is to extend the rural schemes so that inflation’s impact upon the poor would also be eased.
India has not imported wheat through governmental or diplomatic channels in a long time, the last time, India imported wheat was by private traders in 2017. Though government sources have denied the proposal to import wheat when asked last month, sources preferring to be un-named have told Reuters that the discussions regarding this has been going on and the final decision would take some more weeks.
To control the low wheat stock, India would need only 3-4 million metric tons of wheat, but New Delhi could consider 8-9 million tons of wheat import to achieve a bigger effect on prices. India had stopped exporting wheat last year perceiving a shortage. This year, the production of wheat has fallen 10% shorter than the government estimate.
Since the war in Ukraine, Russia stands as the second biggest seller of good to India, especially after the discount in oil prices. “Russia has indicated its willingness to offer a discount on prevailing market prices. There are no restrictions on the export of food commodities from Russia,” one official said. He also said, that India is importing sunflower oil from Russia and the payments are being made in dollars, the same is expected in the case of wheat.
The government wheat stocks were 28.3 million tons on 1 August, which is 20% below the 10-year average. The wholesale wheat prices are at a seven-month high in August on limited supplies, having risen around 10% over two months.
“India can easily secure a discount of $25 to $40 per ton from Russia. This will ensure that the landed cost of wheat remains significantly below local prices,” said a dealer based in Mumbai with a global trade house, reported Reuters.
