According to four sources, India is negotiating with Russia to import wheat at a discount to growing global prices in an unusual effort to bolster supplies and cut food inflation ahead of state and national elections.
The imports would allow New Delhi to intervene more effectively in the market and cut wheat prices, which had risen to their highest level in 15 months in July.
The prospect of imports through private commerce and government-to-government agreements is being investigated by the government. When questioned by Reuters about importing wheat from Russia, one of the sources said, “The decision would be made cautiously.
India hasn’t entered into diplomatic agreements to import wheat in years. India last brought in a sizable shipment of wheat in 2017, when private traders brought in 5.3 million metric tons.
According to two parties with knowledge of the situation, the government’s plan to import Russian wheat is one of the supply-side regulations being considered by the government to reduce the cost of essential goods such as fuel, cereals, and pulses, as well as an expansion of rural initiatives to lessen the effect of inflation on the poor.
Since the conversations are confidential and the ultimate decision might not be made for weeks, the sources wished to remain anonymous. Emails and messages requesting comments from India’s finance, commerce, and government representatives went unanswered.
Sanjeev Chopra, the top official in the federal food ministry, stated last month that there was no plan to import wheat from Russia.
LOW STOCKS OF WHEAT
Even though India only requires 3 to 4 million metric tons of wheat to make up the gap, New Delhi may think about importing 8 to 9 million tons of wheat from Russia to have a much greater impact on pricing, according to a different source.
Since the conflict in Ukraine last year, Russia has overtaken China as India’s second-largest exporter of products, mostly as a result of New Delhi’s cheap oil purchases.
Russia has stated that it is prepared to offer a reduction from the going prices on the market. The export of food products from Russia is not restricted, a representative stated.
According to the insider, India is additionally importing sunflower oil from Russia and paying in US dollars and plans to do so in the future.
“India can easily negotiate with Russia for a reduction of $25 to $40 per ton. This will guarantee that wheat’s landing cost remains much lower than local pricing, according to a trader with a multinational trade business based in Mumbai.
Due to shortages, retail wheat prices in India rose by approximately 10% over two months, peaking in August at a seven-month high.
In government warehouses as of August 1, there were 28.3 million tons of wheat, 20% less compared with the 10-year average.
Due to poor yield the previous year, India restricted wheat exports; this year’s crop is also anticipated to be at least 10% lower than the government’s projection.