Indian Government Implements Measures to Tackle Food Inflation, Halts Onion Exports and Limits Wheat Stocking

New Delhi, December 8, 2023: In response to concerns over rising food prices and potential shortages, the Indian government announced a series of measures on Friday aimed at curbing inflation in food articles. These steps include the prohibition of onion exports, a temporary halt to the use of sugarcane juice for ethanol production, and tighter controls on wheat stocking by traders.

Anticipating lower outputs of essential food items such as sugar and lentils due to a patchy summer monsoon and drought in certain regions, the government is taking preventive actions to mitigate the impact on consumers.

To address the expected decline in sugarcane output, the government has banned the diversion of sugarcane juice for ethanol production, which is typically blended with petrol. The food secretary, Sanjeev Chopra, assured that this decision would not hinder India’s goal of achieving 20% ethanol blending with petrol by 2025-26 (E20). Petroleum secretary Pankaj Jain emphasized that the pause is temporary, and policies will be adjusted as the situation evolves.

With retail inflation predicted to rebound in November, driven by higher food prices, the government imposed a ban on onion exports effective from December 7 until the end of March 2024. Earlier measures included setting a minimum export price (MEP) of $800 per tonne on onion exports until December 31, designed to make exports more expensive for global buyers. Import duties on yellow peas were also lifted to boost inward shipments.

The production of sugar is anticipated to fall due to an ongoing drought in major sugar-producing states like Maharashtra and Karnataka. The government aims to keep sugar affordable for the population, and as a result, the decision to temporarily halt sugarcane juice diversion is seen as a measure to balance the interests of consumers, farmers, and millers.

Further controls have been imposed on wheat stocking, limiting wholesalers to 1000 tonnes and retailers to 5 tonnes at their outlets and no more than 1000 tonnes at their depots.

These measures are part of the government’s strategy to manage the impact of climatic conditions on food production and ensure a steady supply of essential commodities, particularly in the wake of inflation concerns.