“India in discussions with Russia for wheat imports with the goal of lowering food inflation.”

India is currently engaged in negotiations with Russia to secure wheat imports at a discounted rate, with the primary goal of bolstering supplies and mitigating the impact of food inflation, especially in the lead-up to state and national elections scheduled for the following year. This strategic move comes in response to soaring global wheat prices, as detailed in a report by Reuters.

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The discussions with Russia are motivated by the intent to increase wheat supplies within the Indian market, thereby curbing the upward trajectory of food inflation. The country’s efforts are particularly relevant considering that food inflation reached a 15-month peak in July, necessitating measures to stabilize prices.

Key sources have informed Reuters that the Indian government is actively exploring various avenues for wheat imports, including private trade agreements and government-to-government deals. The decision-making process is characterized by prudence and caution.

Importantly, this approach marks a departure from recent years during which India refrained from importing wheat through diplomatic channels. The last notable instance occurred in 2017, when private traders imported a substantial 5.3 million metric tons of wheat.

The proposal to import Russian wheat serves as one facet of the Indian government’s multi-faceted strategy to address inflation-related concerns. Alongside contemplating the import of essential commodities such as fuel, cereals, and pulses, the government is also considering extending rural schemes to mitigate the adverse effects of inflation on vulnerable sections of society. This information was corroborated by sources familiar with the matter.

However, it is pertinent to mention that last month, a senior official from the federal food ministry, Sanjeev Chopra, stated that there were no concrete plans to import wheat from Russia, as indicated in reports by Reuters.

While India’s wheat requirement to bridge the supply gap hovers around 3 to 4 million metric tons, there is contemplation of importing a more substantial 8 to 9 million metric tons from Russia. This larger quantity is envisioned to exert a more substantial influence on wheat prices within the Indian market.

Russia, since the inception of the Ukraine conflict, has ascended to being India’s second-largest supplier of goods, largely attributed to the significant reduction in oil prices offered to New Delhi. Russian officials have signaled their willingness to extend a discount on prevailing market prices for wheat, and there are no existing restrictions on the export of food commodities from Russia.

Experts have asserted that India stands to secure a discount ranging from $25 to $40 per metric ton from Russia, effectively ensuring that the overall cost of imported wheat remains significantly below local prices. An industry professional based in Mumbai, affiliated with a global trade house, has provided this analysis.

Domestically, wholesale wheat prices in India have surged by approximately 10% over a two-month period, reaching a seven-month high in August due to constrained supplies. Last year, India imposed a ban on wheat exports owing to reduced output, and the current year’s harvest is anticipated to fall at least 10% short of the government’s projections.

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