Tuesday, Dec 05, 2023

India’s Wheat Export Ban Raises Concerns In US And Europe

India’s Wheat Export Ban Raises Concerns In US And Europe

India breaks rank with the United States and Europe yet again, this time on wheat exports. The G-7 questions India’s ability to fulfil its international obligations.

Representative image of wheat PTI

Since the war in Ukraine began this February, India is increasingly at odds with the United States and its Western allies. Initially, it was New Delhi’s refusal to call out Russia as the aggressor in Ukraine and now the focus is on India’s decision to ban the export of wheat at a time when the world is facing a massive shortage triggered by the fighting in Ukraine.

The world food shortage and the hike in food prices will figure prominently during the Quad Summit in Japan next week. Though the Quad is primarily focused on the Indo-Pacific, the current anxiety about a major food shortfall will be part of the conversation when Prime Minister Narendra Modi meets President Joe Biden and leaders of Japan and Australia. Biden is likely to urge Modi to reconsider its ban on wheat exports.

India’s decision has not gone down well in Washington and several other Western capitals. Many are recalling New Delhi’s Covid-19 diplomacy when India, which boasted of being the pharmacy of the world, was not in a position to fulfil its commitments, thanks to the second coronavirus wave that devastated the country. Now the ban on wheat exports has led to questioning by the international community.

But unlike during the stoppage of Covid-19 vaccines when India was itself facing a major health emergency, New Delhi is not in a similar position over wheat. The government is being cautious mainly because unseasonal hot weather in March and April is likely to lead to a shortfall in production. New Delhi can tweak the decision if needed in cases where agreements are already signed. This has already been done.  

Yet the ban is on and there are murmurs in the West about whether India can be trusted to fulfil its responsibilities as a global partner. In fact, at a recent meeting of G-7 agriculture ministers, India was criticised for its decision to ban exports. The German minister urged India to assume responsibility as a G-20 member. Linda Greenfield Thomas, the US envoy to the UN also criticised India saying the US wants New Delhi to take a second look at the decision.

“We have been extremely clear that the principle and the need for food security in India are paramount for us. Yet at the same time, we have been very careful and calibrated in ensuring that the needs of the vulnerable economies that are vulnerable to the risks of food security are met to the extent possible,” said Foreign Secretary Vinay Kwatra on Saturday during a briefing on Modi’s visit to Japan. 

The government is clear that while its priority is first and foremost to feed its people, it will also attempt to help countries in need whenever possible.  

The Indian ban on wheat exports last week had led to a sharp spike in prices in the international market. Washington is said to be concerned at New Delhi’s decision, more so because Modi had earlier signalled that India – the second-largest producer of wheat in the world – would shore up its wheat exports and stabilise the world market that has seen a steep rise in prices following the Ukraine war. 

Russia and Ukraine together are the largest producers of wheat in the world. India is the second. But supplies from both Russia and Ukraine have been disrupted because of the war that has led to fears of a massive worldwide shortage of grain.

New Delhi’s announcement last week had surprised the world because it had earlier indicated otherwise. At the India-US summit held with the 2+2 meeting in Washington in April, Modi had promised Biden that if the World Trade Organization permitted, India could export wheat grains worldwide. 

Finance Minister Nirmala Sitharaman said at the World Bank and International Monetary Fund meetings in Washington that India was facing problems with WTO over its desire to export food grain. Again, on April 25, Foreign Minister S Jaishankar spoke of India helping the world with wheat export and stabilising prices. In the meantime, India had wrapped up agreements with Turkey and Egypt to provide wheat. It was looking to have deals with several African and East Asian nations like Thailand and the Philippines.

The United States was relying on India to fill a part of the void. This sudden Indian decision to ban exports has led to disappointment with the Biden administration's expectations from India. Initially, India had grasped the opportunity to step up wheat exports. It is well known that India has massive stocks stored in Food Corporation of India warehouses and is committed to buying wheat offered by farmers every season. But an expected fall in production has led the government to limit its exports. 

Like all governments, the Modi government too has to first ensure that its people already reeling under massive price hikes do not have to face the additional burden of the scarcity of a staple food item. Surprisingly, China has supported India’s stand at a time when bilateral ties are at a low point. 

The Modi government’s order of last week has since been partially modified to ensure that some of the wheat loads already assigned are not turned back from ports. But the export ban remains.