The Indian government has approved the export of 200,000 tonnes of wheat to Nepal under a new quota system. However, domestic traders have expressed dissatisfaction, arguing that the allocation is too late and that the quantity falls short of Nepal’s needs.
On last Saturday, India’s Director General of Foreign Trade issued a notification granting Nepal export privileges through the National Cooperative Exports Limited (NCEL) of India. Nepal has received similar quotas in the past, with the first shipment of 50,000 tonnes allocated under this system. Subsequently, a second lot of 200,000 tonnes was approved, though not all of it was imported.
This marks the third quota issued to Nepal under the current system, and it has stirred mixed reactions from traders. Baburam Adhikari, spokesperson for Nepal’s Ministry of Industry, Commerce, and Supplies, explained that the request for 200,000 tonnes was made in consideration of past supply scenarios. Wheat is Nepal’s third most commonly cultivated cereal, after rice and maize.
Despite this, traders argue that Nepal’s wheat demand far exceeds the allocated quota. Six months ago, the Nepal Flour Mills Association requested 300,000 tonnes based on projections from local flour mills. Radheshyam Agrawal, the association’s general secretary, highlighted the challenges created by the fact that India has designated only one supplier—NCEL—to fulfill the quota.
While NCEL serves as an umbrella organization for India’s cooperative export sector, Agrawal criticized the restrictions, stating that traders should have been allowed to choose suppliers from the Indian private sector. “Dealing with a state-owned company introduces many hurdles. We can’t even predict when the wheat will arrive, and many traders may end up rejecting the allocation,” he added.
For some time, Nepalese traders have turned to other countries for wheat imports due to India’s export ban, with shipments arriving from Australia, Ukraine, and Russia. According to Agrawal, imports from these countries have already begun to arrive, though Nepal faces higher duties on wheat from third-party nations. While the 5% import duty applies to wheat from India, imports from countries like Australia and Ukraine incur a 10% duty.
In terms of wheat import volumes, Nepal has seen a dramatic decline. During the first five months of the current fiscal year, wheat imports fell by 98.48%, according to the Department of Customs. During this period, Nepal imported only 1,491 tonnes of wheat, compared to significantly higher volumes in previous years. Meanwhile, meslin, a mixture of wheat and rye, has been imported as an alternative to wheat, with 488 tonnes coming from Australia and 1,001 tonnes from Ukraine.
Despite the current shortfall, traders remain optimistic, as the new wheat harvest is expected to stabilize prices. Wheat prices in Nepal have risen from Rs5,000 to Rs5,300 per quintal, while refined flour prices have surged to Rs3,200-Rs3,300 per 50-kg bag. However, with alternative imports and the new harvest on the horizon, traders believe stock levels will remain sufficient.
In the broader context, India’s export restrictions on wheat and other food products have sparked concerns globally. In 2022 and 2023, India implemented a ban on non-Basmati white rice exports and imposed a 20% duty on parboiled rice exports, as well as a minimum export price for Basmati rice. These measures led to a significant rise in global food prices. Although these restrictions were intended to protect India’s domestic supplies, many of them have recently been lifted, leading to fluctuations in the global market.
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