Why India Just Limited Wheat Exports
The decision recalls New Delhi’s COVID-19 vaccine export ban last year, with some key differences.
Welcome to Foreign Policy’s South Asia Brief.
Welcome to Foreign Policy’s South Asia Brief.
The highlights this week: India limits wheat exports amid a global food crisis, Sri Lanka’s protesters are still calling for the president to step down, and Nepal sees some ominous economic signs.
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India Faces Pressure Over Wheat Exports
Amid global food shortages spurred by Russia’s war in Ukraine, India had for weeks signaled its intent to increase wheat exports. Last week, New Delhi announced it would send delegations to explore increased wheat trade in Asia and the Middle East. “The farmers of India have stepped up to feed the world,” Indian Prime Minister Narendra Modi said earlier this month.
But then India—the world’s second-largest wheat producer—did an about-face. Last Saturday, the government suddenly announced a partial ban on wheat exports, citing the need to focus on domestic demand. The decision resembles India’s experience with COVID-19 vaccine exports last year. Then, it leveraged its status as the world’s biggest vaccine producer and announced a major effort to export shots, only to suspend exports when it faced its own devastating surge.
Both cases reflect the delicate balance that India must strike between its global role as a public goods provider and tending to its own needs. So far, India has done a better job at striking this balance with the recent wheat export restrictions: It has carved out several exceptions, which it didn’t do when it suspended vaccine exports.
Soon after rolling out its COVID-19 vaccination program in January 2021, India announced it would begin exports. Within days, it had sent more than 3 million free shots to five neighbors in the region. By last March, it had exported about 65 million doses. Modi boasted that as the world’s pharmacy, “India has supplied essential medicines to the needy across the globe in the past and is doing it today as well.”
But in April 2021, India faced the world’s worst COVID-19 surge, and the government was forced to halt all vaccine shipments, without exceptions. The public health emergency at home was acute, but the decision cost India diplomatically and reputationally. Some of the countries denied exports had already paid for the shots, including key partners in South Asia. Although designed as a temporary move, the suspension lasted until last October and created immediate vulnerabilities for the 91 countries waiting for Indian shots.
Fast forward to today, and global food shortages abound. India is not typically a major wheat exporter, but improved seed selection and better practices have given it bumper harvests in recent years. Given the increase, New Delhi set a target for 12 million tons of wheat exports over the course of 2022 and 2023, and it appeared poised to help ease food insecurity.
Facing a severe heat wave that has ruined harvests and fed inflation, India instead announced the new restrictions. As with the cutoff of vaccine exports, the global consequences were immediate. The Chicago wheat futures index surged to $12.40 per bushel, the highest figure since 2008. Closer to home, nearly 2 million tons of grain became stuck in Indian ports, presenting hardships for traders.
However, unlike with the vaccine export suspension, India has carved out multiple exceptions for its partial wheat export ban. The restrictions won’t apply to shipments registered before May 13 or to governments that request wheat for “food security needs.” India will honor a previous deal with Egypt, one of the world’s top wheat importers.
With the world perhaps facing its worst global food crisis since 2008, though, many countries could still be left in the lurch. India exports wheat to Afghanistan, Bangladesh, Indonesia, Malaysia, Nepal, Oman, Qatar, Sri Lanka, the United Arab Emirates, and Yemen. It’s unlikely New Delhi will conclude they all have “food security needs” that warrant continued shipments.
India’s decision came just as the United Nations hosted a ministerial-level conference on global food security. Officials there pressured India to reverse its decision, and it will likely face similar pressure at a G-7 summit next month. From its position on the Ukraine conflict to its wheat export ban, India is quickly learning that with a greater role on the global stage, it will face greater criticism for its policies.
What We’re Following
Sri Lanka still in crisis. If Sri Lankan President Gotabaya Rajapaksa thought appointing a new prime minister would deescalate the political crisis, he was mistaken. Last week, Rajapaksa tapped political veteran Ranil Wickremesinghe for the post. Mass anti-government protests continued this week over food and fuel shortages that the protesters blame on economic mismanagement by the Rajapaksa family.
Protesters are still calling for Rajapaksa’s ouster, although he has given no indication that he will step down. His refusal to resign could further inflame the public, along with worsening economic conditions. People can’t take public transport because of insufficient fuel. Worker salaries have been cut by as much as 30 percent. In an address to the nation this week, Wickremesinghe warned that the next few months “will be the most difficult ones of our lives.”
Pakistan signs truce with militants. Pakistani negotiators reached an agreement this week with Tehrik-i-Taliban Pakistan (TTP), also known as the Pakistani Taliban, for the group to halt attacks until the end of the month, extending an earlier truce. The move is a significant development for Pakistan, which has recently faced a surge in TTP attacks.
The militant group, which has close operational ties to the Afghan Taliban, is a bone of contention between Islamabad and the regime in Afghanistan; the TTP’s leadership is based in Afghanistan, and the Taliban have refused to expel the group. In recent weeks, Pakistan has carried out cross-border airstrikes to target TTP bases in Afghanistan, increasing tensions.
But Pakistan has long preferred negotiations with the TTP, and they have held periodic talks in recent months. A key player on the Pakistani negotiating team has been Lt. Gen. Faiz Hameed, Pakistan’s intelligence chief until last November who now serves as a corps commander in Peshawar.
India considers reopening embassy in Kabul. The Indian Express reported this week that New Delhi is exploring reopening its embassy in Kabul, shut since the Taliban takeover last August. The embassy would be open only for limited functions, possibly including consular services. Senior diplomats wouldn’t be posted there, and New Delhi would not formally recognize the Taliban government.
Even so, reopening the embassy would be a big deal for India, which has long had a rocky relationship with the Taliban and was one of the last regional players to open up formal channels with the group last year. However, the Taliban have shown no opposition to engagement with India. Sher Mohammad Abbas Stanikzai, a senior Taliban leader who studied at a top Indian military academy in the 1980s, met with India’s ambassador to Qatar in Doha last August.
Under the Radar
With ongoing economic problems in Afghanistan, India, Pakistan, and Sri Lanka, little has been said about Nepal, where there are ominous signs. Thanks to a surge in imports, its total trade deficit soared to nearly 30 percent of its GDP in 2021. Its foreign reserves fell by more than $2 billion over the last year, and foreign remittances—which make up one-quarter of Nepal’s economy—fell by nearly 2 percent.
One reason Nepal’s economic stress isn’t getting as much attention is that its current crisis isn’t as serious. But there is strong potential for it to get worse. A record-breaking heat wave could negatively affect the agricultural sector; two-thirds of Nepalis are “directly engaged” in farming. Furthermore, surging global oil prices and food shortages due to the Ukraine conflict could worsen existing food and fuel inflation.
In a recent interview, a senior finance ministry official insisted that “there is no need to panic.” But he acknowledged that “the economy is not in a favorable position.”
In the Dhaka Tribune, journalist Syed Badrul Ahsan highlights the debate over whether Bangladesh’s new Padma Bridge, named after the mighty river it spans, should be given a more formal name. “The lesson should be obvious. That there are names which need not be trifled with—because they have become indelibly associated with historical memory,” he writes.
A Hindu editorial laments the missed opportunities from Indian Prime Minister Narendra Modi’s trip to Nepal earlier this week. “Beyond a soft power emphasis on cultural ties, India-Nepal relations need to graduate to a more meaningful partnership on economic and geopolitical issues,” it argues.
Security scholar Aditi Malhotra, writing in South Asian Voices, explains the implications of the Ukraine crisis for India’s military modernization. “Despite the necessity of Russian military equipment in the near-term, the war is also likely to add further incentives for a gradual shift away from Russia, focus on indigenization, and increasing military cooperation with the West,” she writes.
Michael Kugelman is the writer of Foreign Policy’s weekly South Asia Brief. He is the director of the South Asia Institute at the Wilson Center in Washington. Twitter: @michaelkugelman
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