The Directorate General of Foreign Trade is likely to allow exports of around 2 million tonnes of wheat in total, based on letters of credit issued prior to the export ban on May 13, which is less than half the amount for which export applications are being scrutinised, a source tracking the matter has said.
“Of the applications for exports of wheat worth over 5 mt made by traders, till date about 1.75 mt have been approved. The rejections have been around 2.5 mt,” the source said.
The scrutiny process of applications for exports is almost over and the government expects that total exports allowed would be around 2 mt, while applications for about 3 mt stand to be rejected, he added.
Export ban
The government had banned wheat exports on May 13 based on concerns that continued exports could lead to a shortage in the domestic market as the unprecedented heat wave in March had hit production in the country. Price of wheat, too, had been spiralling in the domestic market.
Subsequently, it was decided to relax the ban in order to allow consignments for which letters of credit were issued before May 13 to be shipped. However, there was a flood of requests and online applications from traders, seeking permission for exporting over 5 mtof wheat, which led the government to believe that all such applications may not be valid and needed to be scrtutinised.
“The scrutiny process has been taking time as it is a multi-layered one with the DGFT directing all its regional authorities (RAs) to physically verify all documents of applicants for wheat exports before issuing registration certificates (RCs). It also asked the RAs to cross check all the LCs with the advising banks as well,” the source said.
Another layer has been added by the DGFT to the scrutiny process with the RAs cross check the LCs with the advising banks.
Even in cases where LCs have been issued by the issuing bank before May 13 but the transmissions have not happened at that time due to holidays or non-working days in the receiving countries (leading to a later date getting registered in the SWIFT system), the requests for exports are being rejected, the source said.
“Wherever there has been any discrepancy, the RAs have been instructed to reject the applications,” the official added.
While wheat exports are banned for the present, India has said that it is open to sending supplies on a G2G (government to government) basis to countries putting in a request.
Last week, the DGFT also amended the export policy for wheat flour mandating that export consignments get recommendation of an inter-ministerial panel on wheat to ensure quality. The amended policy will be applicable from July 12.