Govt removes restrictions on wheat exports; Robust export demand for Indian wheat from Bangladesh
The Directorate General of Foreign Trade (DGFT) issued notifications reclassifying wheat and wheat products from the "prohibited" to the "free" export category, with immediate effect
The change ends a four-year export restriction on wheat that was first imposed in May 2022
Wheat, durum wheat, wheat flour, maida, semolina, wholemeal atta and resultant atta are now permitted for export without a licence
Small and medium enterprises can now export their own wheat product brands overseas following the removal of restrictions
Increased demand from Bangladesh, along with Nepal, Bhutan and Southeast Asian markets, is anticipated due to India's transport and logistics advantage
The move comes amid elevated global wheat prices linked to supply disruption from the Russia-Ukraine conflict, and is expected to help ease international prices
DGFT Export Classification — Free, Restricted, Prohibited, STE
India's foreign trade in goods is governed by the Foreign Trade (Development and Regulation) Act, 1992, under which the Directorate General of Foreign Trade (DGFT), a subordinate office of the Ministry of Commerce and Industry, notifies the Foreign Trade Policy (FTP) and the ITC (HS) Classification of Export and Import Items. Under the FTP 2023, all exports and imports are "Free" by default unless specifically regulated.
Key Details
- Four categories exist: Free (no authorisation needed), Restricted (requires a DGFT licence/authorisation), Prohibited (not permitted at all), and Exclusive trading through State Trading Enterprises (STEs)
- The Foreign Trade Policy currently in force is FTP 2023, effective from April 1, 2023
- Movement of an item between categories (e.g., prohibited to free) is done through a DGFT notification under the ITC (HS) schedule, not through fresh legislation
- Export prohibitions on food items are often layered with the Essential Commodities Act, 1955, which allows the Centre to regulate production, supply and trade of essential commodities during scarcity
The wheat export ban was originally imposed via a DGFT notification in May 2022 shifting wheat from "free" to "prohibited" to control domestic food inflation triggered by global supply shocks; the 2026 notification reverses this by moving wheat back to "free," illustrating how executive notifications (not parliamentary law) drive day-to-day trade policy changes.
Minimum Support Price (MSP) and CACP
The Minimum Support Price is the price at which the government commits to procure crops from farmers, acting as a floor price and safety net against market volatility. It is recommended by the Commission for Agricultural Costs and Prices (CACP), an attached office of the Ministry of Agriculture, and approved by the Cabinet Committee on Economic Affairs (CCEA).
Key Details
- MSP for wheat in the 2025-26 Rabi Marketing Season was fixed at approximately Rs 2,425 per quintal
- Government policy (announced in the Union Budget 2018-19) targets MSP at a minimum of 1.5 times the All-India weighted average cost of production
- MSP is not a statutory right in most crops; procurement is primarily carried out through the Food Corporation of India (FCI) and state agencies
- Domestic wheat prices had been depressed relative to MSP, which was cited as one rationale for permitting exports — enabling exports can lift domestic prices toward MSP levels and support farm incomes
Officials indicated that with domestic wheat prices running below remunerative levels, allowing exports would help align domestic prices closer to MSP and improve farmer incomes, linking a trade-policy decision directly to the MSP/procurement framework tested in GS3 agriculture questions.
WTO Agreement on Agriculture — Public Stockholding and Export Restrictions
The WTO's Agreement on Agriculture (AoA, 1995) disciplines both domestic support (subsidies) and export measures. Members are generally required to notify export prohibitions/restrictions on foodstuffs, and food-security-linked public stockholding programmes (like India's MSP-based procurement) operate under a "Peace Clause" that shields them from WTO disputes pending a permanent solution.
Key Details
- India invokes the Bali Peace Clause (2013) to protect its public stockholding programme for food security from WTO challenge despite exceeding the 10% de minimis subsidy cap under Article 6.4 of the AoA
- Export restrictions imposed for food security reasons (such as India's 2022 wheat ban) are permitted under WTO rules but member countries objected, citing global food-price impact
- India is a founding member of the WTO (1995), successor to GATT (1947)
India's original wheat export ban of 2022 drew criticism at global forums (including the G7 and WTO members) as contributing to food-price volatility; the 2026 lifting is being read internationally as a supply-side relief measure, showing how domestic food-security trade measures intersect with multilateral trade obligations.
- Original wheat export ban imposed: May 2022, citing domestic price control amid the Russia-Ukraine conflict
- Ban lifted: DGFT notification effective August 24, 2026 (wheat and wheat products moved from "prohibited" to "free")
- India's wheat production, crop year 2025-26 (July 2025-June 2026): estimated around 120 million tonnes, roughly 2.3% higher than 2024-25
- Wheat MSP for 2025-26 Rabi season: approximately Rs 2,425 per quintal, an increase of Rs 150 over the previous season
- India is the world's second-largest wheat producer after China
- Anticipated top export destinations: Bangladesh, Nepal, Bhutan, and Southeast Asia