The UAE decided on Wednesday that it would not sell wheat bought from India to anyone else for the next four months.
According to an official statement issued by the UAE Ministry of Economic Affairs, the ban will take effect on May 13, 2022 and will apply to wheat, flour made from Indian wheat and all its varieties.
The UAE attributed its decision to the current international situation. However, according to the English newspaper Indian Express, India does not want Dubai or Abu Dhabi to give its wheat to other countries.
"India does not want the grain or wheat it exports to Dubai or Abu Dhabi to be given to another country, India wants it to be used locally," the report quoted a key source as saying. '
The Indian Express quoted sources as saying that India, in return, was ready to exclude these countries from the list of restrictions on its wheat exports.
India had on May 14 announced a ban on wheat exports. However, it also said that countries whose food security was at risk would be excluded from the scope of the ban.
In addition, this order will not apply to pre-contracted exports. Also, with the permission of the Government of India, exports will continue with certain conditions.
According to the official notification, India has taken this decision in view of rising wheat prices in the local market.
What is the reason behind the decision?
The UAE's website, The National News, quoted experts as saying that the government's decision was due to strong diplomatic ties with India.
"India sees the UAE as a special partner," Kishore Narne, director of Motilal Oswal Security Company, told The National. The relationship between the two is very strong, that is why the government has taken this special decision.
There is a general consensus between the two countries that India is ready to grant export concessions to the UAE if wheat is not used for commercial purposes. This concession is being given to Bangladesh, UAE and those countries which have strong diplomatic relations with India and are in need.
How much wheat does India export to UAE?
India exported 4.71 lakh tonnes of wheat to UAE between 2021-22. It was valued at approximately 65 13,653 million. About 6.5 per cent of India's exports last year were sent to the UAE.
While this is not a huge amount for India's exports, it is huge for the UAE. According to the US Department of Agriculture, the UAE consumes 1.5 million tons of wheat annually and imports it whole.
Russia accounts for more than 50% of UAE wheat imports. It is followed by Canada, Ukraine and Australia. From 2020-21, India has also become a major exporter to the UAE. India now exports 1.88 lakh tonnes to the Gulf Federation.
This export further increased in the year 2021-22 before the decision to impose sanctions. In fact, the war between Russia and Ukraine has affected trade through ports connected to the Black Sea.
However, the arrival of wheat from Russia and Ukraine in the international market is expected to improve supply from July.
What is in the statement of UAE?
The UAE Ministry of Economic Affairs said that business was affected by what was happening at the international level and that is why this decision is being taken. The UAE has said it is taking this decision in view of its strong and strategic partnership with India.
The ministry elaborated that companies wishing to sell imported wheat outside the country before May 13 would have to submit the required documents and obtain approval.
Special relations between India and the United Arab Emirates
The UAE has been a key partner of India. 3.5 million Indian passport holders live here. At the same time, 35% of the UAE's population is Indian, more than any other Gulf country.
When the corona virus was at its peak, India supplied essential supplies to the UAE by air. At that time, China's supply chain was broken and India became a major exporter to the UAE amid shortage of many essential commodities including pulses, sugar, grains, vegetables, tea, meat and seafood.
The UAE is preparing for a big event on the occasion of International Yoga Day on June 21. UAE Minister for Tolerance Nahyan bin Mubarak Al Nahyan will hold talks with Indian Ambassador Sanjay Sudhir during a function here.
Yoga will also be done in the evening at the famous Sheikh Zayed Cricket Stadium. An estimated 8,000 to 10,000 people will attend the event.
India is the second largest producer of wheat in the world after China, but exports less due to higher domestic consumption. India had produced about 108 million tonnes of wheat last year but exported only 7 million tonnes of it. India imposed sanctions due to extreme heat.
Wheat is widely grown in northern India. In Central India, Madhya Pradesh also has high production.
In most areas, wheat is harvested only in March and April.
March and April are the hottest months in northern India this year. Due to which wheat production has been severely affected.
Wheat needs a temperature of 25-30 degrees Celsius till March. But in March, the mercury was much higher in many parts of northern India.
Wheat production is estimated to be about 5% lower in government files.
The UAE is India's third largest trading partner. A free trade agreement is also being signed between the two countries.
Israel, India, the United Arab Emirates and the United States announced the I2U2 (India, Israel, USA, UAE) alliance on Tuesday. The four countries will work together under this alliance for trade and security.
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