India’s food export ban will keep domestic prices in control while also helping the government in quid pro quo for government transactions with other countries, Somnath Mukherjee, CIO & Senior Managing Partner- Product & research at ASK Private Wealth, said while speaking on a Moneycontrol panel on ‘Govt’s Trade Policy On Curbing Exports & Imports’.
The Union government on July 20 prohibited the export of non-basmati white rice. The move is the latest in a series of steps taken by the government to curb the rising prices of food last year. On June 12, the Centre, to effectively manage the overall food security in the country and prevent hoarding and unscrupulous speculation, issued an order imposing stock limits on wheat. In May last year, the government banned all exports of wheat, which is yet to be lifted.
“On the food side this is a case of keeping domestic prices in control, as India had done in 2007 when the move had actually dampened inflation in what could have been a much worse scenario,” he said.
India has often imposed export control measures during periods of high global prices. During the 2007-08 and 2010-11 food price crises India banned export of rice, mostly non-basmati rice, for extended periods, a report by International Food Policy Research Institute said.
“However, despite the wheat ban, India ended up exporting more than the year before. It means India is only looking to make food exports a strategic tool in open market operations, helping India achieve other strategic objectives with targeted countries,” Mukherjee said.
The Egypt example
Citing an example, he said that Egypt had been a large importer of wheat from Ukraine and Russia but that route shut overnight when the conflict began and India emerged as a potential alternative.
“In lieu of the move, a relationship that was in slumber sprung to life. President Egypt was the chief guest in the Republic Day parade, and the PM went to Egypt a few months back,” he said.
PM Modi was on a state visit to Egypt on June 24-25 at the invitation of Abdel Fattah El-Sisi, its President. The Egyptian leader had extended this invitation earlier this year in January 2023 when he was the chief guest at Republic Day celebrations.
“India is targeting exports of critical commodities in global shortage for maximum benefit as quid pro quo,” Mukherjee said.
Stating that the move was the need of the hour, he added, “It’s not just India which has pivoted from the global consensus of free trade. We are seeing the world making a very sharp move away from theoretical cannons of free-trade practices. Every country will choose its battles; this was not unexpected in the current global scenario.”
Watch the full discussion here.
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