India dragged to WTO on wheat exports

By Gargi Parsai

NEW DELHI, MARCH 28. Stung by India's successful entry into the global foodgrains export market, the United States and Canada have raised trade- related objections in the World Trade Organisation (WTO).

These developed nations, who are hit by India's debut entry into the world market, have alleged that India has subsidised wheat export. Despite the fact that the Indian quality wheat - which is not really comparable to the U.S. or Canadian variety - is competitive with the European (French) wheat, the two major players are crying foul. A meeting to address the issue is slated to be held in Geneva tomorrow.

In a desperate bid to offload its burgeoning food stocks which stand at 467.52 lakh tonnes, India recently got into trading foodgrains. It has so far exported 16,92,022 lakh tonnes of wheat, mostly to Bangladesh, Malaysia, Philippines, the UAE, Yemen, South Korea, Myanmar and Oman. About 5 lakh tonnes has been contracted for Russia and 3.5 lakh tonnes for Iraq.

The contracting was done by public sector agencies and cooperatives such as the MMTC, STC, PEC, NAFED and NCCF. The U.S. and Canada have also objected to what they called Government agencies trading in wheat. The fact, however, is that the Food Corporation of India (FCI) had floated a global Expression of Interest for wheat export last November-December. The ex-godown rate that was bid was about $90 a tonne (comparable to the Below Poverty Line rate) excluding transport costs, insurance, freight and handling. The FOB (Freight on Board) rate of Indian wheat, however, came to $102 a tonne, as against the FOB price of French wheat at around $101 a tonne, Kazakistan's $87 a tonne, and Pakistani wheat at about $105 a tonne.

The Indian wheat was competitive and even though the excess wheat available is about 233 lakh tonnes on March 1, not too much was loaded in the price as the demand would have fallen. India has also recently contracted 1,23,000 tonnes rice for export at Rs. 6750 a tonne in the world market. The price was awarded after an open global tender.

The world trade in wheat is said to hover around 105 million tonnes a year. The mega trading countries are the U.S., Canada, Australia and Argentina. India is a much smaller and a new entrant to the market and is learning to face up to the competitiveness in the market place under the WTO regime.

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