India in talks with Russia to import wheat, aims to reduce food inflation
With an aim to increase supplies and reduce food inflation ahead of state and national elections next year, India is in talks with Russia to import wheat at a discount to surging global prices, according to a report published by the news agency Reuters
The wheat imports from Russia will allow India to intervene more effectively in the market to drive down wheat prices that stoked inflation to a 15-month high in July.
Speaking to Reuters, sources said, “The government is exploring the possibility of imports through private trade and government-to-government deals. The decision will be made cautiously.”
India has not imported wheat through diplomatic deals in years. In 2017, the country imported a significant amount of wheat when private traders shipped in 5.3 million metric tons.
The Indian 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.
Last month, Sanjeev Chopra, the most senior civil servant at the federal food ministry, said there was no proposal to import wheat from Russia, as per Reuters reports.
It is pertinent to note that India needs only 3 million to 4 million metric tons of wheat to plug the shortfall. However, India might consider importing 8 million to 9 million tons of wheat from Russia to have a far bigger impact on prices, said sources.
Since the beginning of the Ukraine war last year, Russia has become India’s second-biggest 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,” an official told Reuters.
“India can easily secure a discount of $25 to $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.
In India, the wholesale wheat prices surged around 10% over two months to a seven-month high in August on limited supplies. 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.
