INDIA- Various credible and anonymous sources provide that India is in talks with Russia to import wheat at a discount as global prices surge, in a move to boost supplies and curb food inflation in the nation, according to a report by Reuters.
The imports would allow New Delhi to intervene more effectively in the market to drive down wheat prices that stoked inflation to a 15-month high in July.
“The government is exploring the possibility of imports through private trade and government-to-government deals. The decision will be made cautiously,” one of the sources told Reuters when asked about wheat imports from Russia.
According to the report, India has not imported wheat through diplomatic deals in years. The last time India imported a significant amount of grain was in 2017 when private traders shipped in 5.3 million metric tons.
The government’s plan to import Russian wheat is one of the supply-side measures being considered to bring down prices of key commodities like fuel, cereals, and pulse along with an extension of rural schemes to ease the impact of inflation on the poor, two of the sources with knowledge of the matter said.
However, the discussions are private and the final decision might be weeks away.
Last month, Sanjeev Chopra, the most senior civil servant at the federal food ministry, said there was no proposal to import wheat from Russia.
Low wheat stocks necessitate move
Although India needs only 3 million to 4 million metric tons of wheat to plug the shortfall, New Delhi might consider importing 8 million to 9 million tons of wheat from Russia to have a far bigger impact on prices.
Since the war in Ukraine last year, Russia has become India’s second-largest seller of goods mainly on account of discounted oil purchases by New Delhi.
“Russia has indicated its willingness to offer a discount on prevailing market prices. There are no restrictions on the export of food commodities from Russia,” one official said.
India is also importing sunflower oil from Russia and settling payments in U.S. dollars and is planning to use the same approach, the official added.
“India can easily secure a discount of US$25 to US$40 per ton from Russia. This will ensure that the landed cost of wheat remains significantly below local prices,” said a dealer based in Mumbai with a global trade house.
Wholesale wheat prices in India surged around 10% over two months to a seven-month high in August on limited supplies.
Wheat stocks at government warehouses were at 28.3 million tons on Aug. 1, 20% below the 10-year average.
Last year, India banned wheat exports due to lower output, and this year’s crop is also expected to be at least 10% lower than the government’s estimate.