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India's Export Policy Shift: Nationalisation of Wheat and Rice Trade Underway?

The government’s strategic decisions and the emergence of NCEL prompt concerns and hopes for farmers and trade dynamics.


India's export

In a move sparking debates and speculation, India's recent export policy adjustments, particularly regarding wheat and rice, have raised questions about the potential nationalisation of these crucial food commodities. The government's permitting of specific export quantities through the National Cooperatives Exports Limited (NCEL) has ignited discussions about the changing landscape of India's export trade.


Amid ongoing restrictions on rice exports, the government's allowance of specific quantities for diplomatic purposes, decided by the Ministry of External Affairs in consultation with the Ministry of Food and Public Distribution, has triggered significant deliberations.


The recent notification by the Director General of Foreign Trade about permitted export quantities of rice to certain countries, and notably, the inclusion of wheat and wheat products for export to Bhutan, has raised eyebrows due to the stipulation that these exports will be facilitated through NCEL. This development has led to speculation on whether India's wheat and rice exports are now being gradually nationalised, prompting concerns about the potential ramifications.


NCEL, registered under the Multi-State Cooperative Society Act, 2002, and backed by prominent entities such as GCMMF (owner of Amul), NAFED, IFFCO, KRIBHCO, and NCDC, has emerged as a significant player in this landscape. However, its lack of prior experience in export-import intricacies raises questions about its preparedness for such a pivotal role.

The timeline of export bans and trade duties, especially those imposed on various types of rice, serves as context. The government's strategic decisions on export duties and minimum export prices have drawn contrasting responses from exporters and industry stakeholders, shaping the ongoing narrative.


One of the key considerations is the potential impact on farmers. Media reports suggest that NCEL's involvement in rice exports, aiming to ensure a fair share of export profits for farmers above the minimum support price (MSP), has garnered attention. However, uncertainties persist regarding how effectively this will be implemented, particularly concerning open market purchases and ensuring MSP compliance by traders.


Moreover, the government's control over the quantity and destination of exports, seemingly influenced by diplomatic considerations, marks a departure from past practices where public sector enterprises managed these decisions. This shift has implications for existing PSUs in the Ministry of Commerce, potentially altering their roles in the export domain.

The impending parliamentary elections in April 2024 add another layer of complexity to this situation. With projections of reduced rice production and climate uncertainties looming, the government's cautious stance on central pool stocks and export bans until at least October 2024 underscores the evolving nature of this policy.


The emergence of NCEL and its role in the export domain presents a dynamic shift in India's trade landscape. Whether it can effectively compete in a future open market scenario against private trade will be a critical test for its efficacy and impact on the agricultural economy.


As India navigates these shifts in its export policies, the outcome could significantly influence the future trajectory of agricultural trade, farmer welfare, and the role of cooperative entities in shaping the nation's export dynamics.

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