As Food Inflation Bites, India Plans To Import Wheat From Russia

(CTN News) – The Inflation Indian government is in discussions with Russia about importing wheat at a discount to surging global prices in an effort to boost supplies and curb food inflation ahead of state and national elections next year.

With the imports, New Delhi will be able to intervene more effectively in the market to lower wheat prices, which stoked inflation to a 15-month high in July.

Business Standard, citing Finance Secretary T V Somanathan, reported that India would take a medium-term view to ease inflation pressures and avoid any knee-jerk reactions to temporary increases in prices.

Several measures have been taken by the government to control inflation. Somanathan told Business Standard that the measures are ongoing and will be intensified. He added that decisions should be made with a medium-term view rather than based on data for the next one to two weeks or months.

A source told Reuters, when asked about wheat imports from Russia, “The government is exploring the possibility of importing through private trade and government-to-government agreements. The decision will be made cautiously.”.

In recent years, India has not imported wheat through diplomatic channels. Last time India imported significant quantities of wheat was in 2017, when 5.3 million metric tons were imported by private traders.

According to sources with knowledge of the issue, the government is considering importing Russian wheat as one of its supply-side measures to help lower fuel prices, cereal prices, and pulse prices, as well as extending rural programmes to reduce the impact of inflation on the poor.

The sources declined to be identified as the discussions are confidential and the final decision may not be made for several weeks. A request for comment from the Indian finance, trade, and government spokespersons was not responded to.

Earlier this month, Sanjeev Chopra, the chief of the federal food ministry, stated that there was no plan to import wheat from Russia.

WEAK STOCK LEVELS OF WHEAT Inflation 

New Delhi may consider importing eight million to nine million tons of wheat from Russia, according to another source, even though India only needs three million to four million tons of wheat to fill the shortfall.

Russia has become India’s second largest supplier of goods since the war in Ukraine last year, primarily due to India’s discounted oil purchases.

According to one official, Russia is willing to offer discounts on prevailing market prices. There are no restrictions on the export of food commodities from Russia.

According to the official, India is also importing sunflower oil from Russia and settling payments in US dollars.

‘India can easily obtain a discount of $25 to $40 per ton from Russia, ensuring that the landed cost of wheat remains significantly lower than local prices,’ according to a Mumbai-based dealer.

During August, wholesale wheat prices in India increased by around 10 percent over the previous two months to a seven-month high due to limited supplies.

Government warehouses had 28.3 million tons of wheat on Aug. 1, 20 percent below their 10-year average.

In India last year, wheat exports were banned due to lower output, and this year’s crop is expected to be at least 10 percent lower.

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