Home / Industry / Agriculture /  Exporters likely falsified LCs for 2MT wheat
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Exporters may have falsified letters of credit (LCs) for nearly 2 million tonnes of wheat, government officials said after receiving an unusually high number of agreements and backdated LCs following the 13 May ban on exports.

The directorate general of foreign trade was forced to order physical checks of all documents and drafted enforcement agencies, including the Economic Offences Wing and the Central Bureau of Investigation, to probe fraudulent letters of credit.

“The unusually high number of requests made us suspicious. At one point we estimated that wheat exports after the ban announced on 13 May would cross 3.5 million tonnes (MT) but now the final number stands at 1.45 MT," a commerce ministry official stated.

The official said the backdated LCs and agreements were submitted mostly by fly-by-night operators hoping they would be cleared for export. He added that some big players also tried submitting agreements to get shipments passed.

“We aren’t just going by the LCs because they are easy to create. We are enquiring with the banks. Under normal circumstances, such things are allowed to pass but it was suspicious when so many backdated LCs came in after the ban," the official added.

Experts said such attempts were bound to happen after international wheat prices jumped sharply following the Russia-Ukraine war. As per data provided by the ministry of consumer affairs, the international price of wheat is nearly 40% higher than domestic prices. The grain is selling at around $450- 480 per tonne in the international market, as per the ministry.

Wheat exporters had complained that the sudden export ban resulted in a massive pile-up at ports, most prominently at Kandla, Gujarat. It is after these reports that the government allowed certain relaxations such as allowing exports of consignments that were registered with the customs prior to the ban.

Queries sent to a spokesperson of the commerce ministry on Tuesday remained unanswered at press time.

Explaining the rationale behind the ban, external affairs minister S Jaishankar had said that international traders based out of Singapore and Dubai made a run on Indian wheat amid global grain shortages.

“I had said on various occasions that we see a food crisis in the world and would like to help. But what we then saw was a run on our wheat. A large part was being done by international traders based out of Singapore and to some degree Dubai. The result was that many of traditional buyers of Indian wheat, such as Bangladesh, Sri Lanka and Nepal, the Gulf, Yemen and Sudan were “squeezed out". “Our wheat was stocked for being traded. Our wheat was being stocked for speculation," he said while peaking at Globesec 22 Bratislava Forum in Slovakia.

Jaishankar said New Delhi did not want to give speculators open access to the Indian market and avoid a situation similar to that seen with Covid vaccines. “Rich people got vaccinated and the poor people were left to god."

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