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NEW DELHI: India is looking to write a new playbook to meet growing global demand for wheat, particularly from South Asian countries, as the Russia-Ukraine war has disrupted supplies of the grain from the region, according to two people aware of the development.
Russia and Ukraine account for nearly a quarter of global wheat exports, and with the conflict between the two countries showing no signs of abating anytime soon, India can try and tap a sizeable portion of the world wheat trade.
A prolonged war could increase dependency of wheat importing countries on large exporters such as India. A stronger dollar amid rising oil prices could also work in favour of Indian exporters.
According to industry executives, India can easily meet the short-term jump in global wheat demand as it has surplus stocks this year. The country has more than 100 million tonnes of the staple in its granaries, with domestic output expected to touch a record 316 million tonnes in 2021-22.
India, traditionally, has not been a significant exporter of wheat but over the last two years the country has managed ship out large quantities of non-basmati rice and wheat.
But while India has enough stockpiles to export wheat, Madan Sabnavis, chief economist at Bank of Baroda, pointed out that it lacks long-term policy which allows for smooth overseas sales of the commodity.
“It's a political issue about whether we should be exporting wheat or not. So, theoretically one can say that we always had the option of exporting wheat into the market, especially beyond what buffer stock norms mandated," Sabnavis said.
According to government data, India’s wheat exports during April-October surged 546% year-on-year to $872 million. In terms volumes, exports jumped 527% on year to 3.2 during the period.
With the anticipated demand, people cited above said, India could end up exporting a record 7-8 million tonne of wheat in FY22. It had sold 2.09 million tonne of the food grain in 2020-21.
Among South Asian countries, the Philippines, which happens to buy a lot of Russian wheat, is looking at India to meet its demand. Although Asia Pacific countries do not directly import large quantities of food from Russia, the only exception is the Philippines, where wheat is the second-largest import from Russia, Moody’s Analytics said in a note.
Queries emailed to ministries of Commerce and Industry, Agriculture and Farmers' Welfare and the Philippines embassy in New Delhi on Thursday remained unanswered till press time.
Experts say India will find itself in an advantageous position.
“There will be a huge hole out there because Russia and Ukraine accounted for nearly one-third of the global wheat exports in 2020. Escalation in tension means this is now an issue about food security and countries will look out for wheat imports," said Biswajit Dhar, professor at Centre for Economic Studies and Planning, School of Social Sciences, JNU.
“The way the situation is panning out, the net food-importing countries will be pushed to the wall. For them importing from wherever it is available will be a priority. India is a large wheat exporter and hence will find itself at an advantageous position," Dhar said.
India's primarily exports wheat to neighbouring countries, with Bangladesh accounting for the largest share - more than 54% in both volume and value terms in 2020-21.
In 2020-21, India entered new wheat markets such as Yemen, Afghanistan, Qatar and Indonesia.
India accounts for barely one per cent of global wheat exports. However, its share increased from 0.14% in 2016 to 0.54% in 2020. India is the second largest producer of wheat, accounting for 13.53% of world production. It produces around 107.59 million tonne of wheat annually, of which a major chunk goes for domestic consumption.
The current fiscal has already been strong in terms of cereals exports and if new orders pour in, India could end up exporting historic high levels of wheat this fiscal and in the first half of next year.
