Govt lifts ban on wheat exports, forbids onion exports

The government today decided to lift four year-old ban on wheat exports but prohibited onion exports to control its rising prices.

The decision to open wheat exports was taken by the empowered Group of Ministers (eGoM) on food, headed by Finance Minister Pranab Mukherjee in the wake of record production and storage problem.

"Wheat and non-basmati rice exports have been put under the Open General License (OGL)," Commerce and Industry Minister Anand Sharma told reporters.

However, the foodgrains exports would be subject to a quantitative restrictions of two million tonnes each.

"We will stop export of wheat and non-basmati rice once shipments reaches two million tonnes each," Food Minister KV Thomas said.

Wheat exports was banned in early 2007 to augment buffer stock when the output had fallen.

While the ban on non-basmati rice exports was lifted in July after three years with a quantitative restrictions of one million tonnes, it was put on hold by the Delhi High Court following allegations of irregularities in quota allocation.

Thomas said that onion export has been banned and the situation would be reviewed every two weeks. Onion prices have risen to Rs 25 per kg in retail market from Rs 15 per kg a month ago on supply constraints.

Although food inflation is near the double digit, the prices of rice and wheat have remained stable and the government is grappling with storage problem on the back of record foodgrains production of 241.56 million tonnes.

Thomas clarified that two million tonnes of non-basmati rice export would be over and above one million tonnes allowed in July.

He also said the government will not export wheat and non-basmati rice through FCI godowns.

The government has allowed exports on the back of a bumper production of wheat at 85.93 million tonnes and rice at 95.32 million tonnes in the 2010-11 crop year.

The government godowns are overflowing with wheat and rice stocks and the Food Corporation of India (FCI) is facing a storage crunch.

As of August 1, FCI held 61.1 million tonnes of wheat and rice, which was much higher than the buffer stock norms prescribed by the government.

Thomas said that EGoM has approved export of 50,000 tonne of 'Ponni' rice and 15,000 tonne of 'Matta' rice through designated ports.

The EGoM also decided to continue import of crude edible oil at zero duty and refine oil at 7.5% till September 30, 2012.

It also extended the scheme of sale of subsidised imported edible oil through rations shops by one year. Under the scheme, the Centre provides Rs 15 per kg subsidy to states for distribution of cooking oil through PDS.

The EGoM approved export of 10,000 tonnes of coconut oil in a packet of five grams from Kerala, Thomas added.