India lifts wheat export ban, but high prices may limit shipments

India has removed restrictions on wheat and wheat flour exports, allowing traders to ship the grain freely after a period of quota-based sales. This policy shift comes as government food grain stocks are at a five-year high, easing concerns about domestic food security.

The Directorate General of Foreign Trade (DGFT) officially revised the export policy for durum wheat and other wheat from "Prohibited" to "Free" with immediate effect. Similar measures were taken for wheat flour and related products like atta, maida, and semolina.

Previously, the government had permitted limited exports through quotas totaling 5 million tonnes. The complete removal of these restrictions is attributed to a significantly stronger domestic supply position. As of August 1, Food Corporation of India wheat stocks reached 50.5 million tonnes, a nearly 46% increase from the previous year.

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At an exchange rate of ₹95.7 to the dollar, Black Sea wheat at about $270 a tonne works out to roughly ₹2,580 per 100 kg before freight. Once freight to Southeast Asia is added, the price rises to about $310-315 a tonne, or roughly ₹2,970-3,015 per 100 kg.

Government wheat procurement for the 2026-27 marketing season also exceeded its target, reaching approximately 35.76 million tonnes. This robust domestic supply coincides with global wheat supply disruptions, including attacks on Russian and Ukrainian grain infrastructure, which have impacted Black Sea shipments.

However, traders indicate that the policy change might not immediately lead to large export volumes. Indian wheat remains priced higher than global market rates. For instance, Black Sea wheat costs about $270 per tonne before freight, rising to $310-315 per tonne with freight to Southeast Asia. In contrast, Indian wheat at Kandla port would need to be around ₹2,600 per 100 kg for exporters to break even, but current prices hover around ₹2,700 per 100 kg. This price disparity has previously resulted in export quotas not being fully utilized, with actual exports being minimal.

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It is at this price equation that earlier export quotas have not translated into anything close to the permitted volumes.