Ban decision chokes wheat export pipeline

The sudden ban on wheat exports has resulted in complete collapse of the export pipeline. According to trade estimates, about 7,000 trucks loaded with wheat are stuck at various ports, of which 4,000 trucks are from Madhya Pradesh.

The government has said that it will allow those exports to carry on, which have letter of credit (LC) issued before May 13. However, exporters said hardly 10% of the wheat exports take place through LCs, which means, that a large quantity of wheat contracted by traders cannot go overseas.

Exporters, who had entered into contracts with local traders, have refused to lift the grains, which is expected to result in major trade litigation. The traders from Indore mandi in MP have written a letter to Prime Minister Narendra Modi requesting to allow export of all the wheat that is stuck in transit before May 13, when the order to ban wheat exports was issued.

Traders from Ratlam mandi have given a call to stop trading from May 17. "The government first lured the traders to export wheat, it opened a special desk to facilitate exports and extended concession on mandi tax. Now, it has suddenly left traders in lurch," said a trader.

But exports of wheat flour and value added FMCG products are now expected to increase.