India faces heat at WTO over wheat export ban

India's wheat export ban and usage of the peace clause to protect its food programmes against action from trade disputes have come under fire at the World Trade Organisation (WTO).

The US, Japan, Canada and Thailand have questioned both these measures and, along with Uruguay, requested consultations with India on the usage of the peace clause for exceeding the 10% ceiling on support it offered to its rice farmers.

"They are trying to test the limits of the peace clause as the recent ministerial outcome didn't give any clarity on it and the permanent solution for food stockpiles," an official said.

Another official based in Geneva said, "They said the ban has further rattled the already rattled food market." Japan, Brazil, Paraguay, Switzerland and Thailand had also raised questions about India's wheat and rice policies at the first agriculture meeting after WTO's 12th Ministerial Conference (MC12) earlier this month, the person said.

Replying to questions raised by the US, EU, UK and Canada this week on wheat export ban and their doubts if such a measure was necessary going ahead, New Delhi said it is not a major wheat exporter and that its ban would not have significant bearing on international market prices.

India had banned wheat exports on May 13 to control rising domestic prices amid concerns over local output being hit by high temperatures and global supply shortages due to the Russa-Ukraine war. However, it allowed exports against valid irrevocable letters of credit issued on or before May 13, as a transitional arrangement.

The Geneva-based official cited above said the western countries claimed that global wheat prices spiked by 6% on the first day of trading on the Chicago Board of Trade wheat futures following India's announcement.

"They also doubted if such a measure was necessary because institutions including the USDA have forecast India to produce almost 100 million tonnes of wheat in FY23, higher than the average annual volume of production from 2015-20," the official said.

India argued that it is unfair to pin the blame on it for rise in global wheat prices as those were mostly driven by large buyers' behaviour.

The US alleged that Bangladesh was a victim of India's move on international markets as it paid less than $400 per tonne for Indian wheat earlier but is now pushed to procure from more expensive sellers.