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India plans to sell wheat from its state reserves to bulk consumers such as flour millers and biscuit makers from next month, according to a government order seen by Reuters, as it seeks to keep a lid on local prices by boosting supplies. The government has allowed the state-run Food Corporation of India (FCI) to start offering wheat from its inventories from next month at 23,250 rupees ($279) a ton, the order said, nearly 12% lower than prevailing open market prices.FCI is yet to decide the quantity of wheat that it plans to sell on the open market. Last year, FCI began selling wheat to private players in June. It sold a little more than 10 million metric tons in the fiscal year to March 2024, a record sale from state reserves. Because of the attractive price at which FCI will offer the wheat from its stocks, many private players would be interested in buying the grain in large quantities, said a Mumbai-based dealer with a global trading house. Indian wheat prices have jumped nearly 6% year-on-year. After five consecutive record harvests, a sharp rise in temperatures shriveled the wheat crop in 2022 and 2023, pushing up prices of the staple and prompting the world's No. 2 producer to ban exports.

Govt allows FCI to sell wheat from stocks to flour millers, biscuit makers

The Union government has spruced up the finances of the Food Corporation of India (FCI), the Centre’s main grain-handling arm, helping it to run its massive operations without taking on debt for the first time and cut interest payments by a tenth. The FCI, responsible for ensuring food security of the world’s most populous nation, has long been resorting to external borrowings to maintain food reserves, fund its purchases of grains from millions of farmers and then redistribute them to 800 million beneficiaries free of cost. In 2020-21, the Union government paid off the federal food agency’s ballooning debt of ₹3.39 lakh crore, but despite the closing of loans, it has had to dip into off-budget borrowings, which don’t show up as food subsidy in the budget and therefore masks the government’s fiscal deficit.

Centre tweaks FCI funding, helping it to go debt free

The issuer has made timely interest payments.

Shri Atish Chandra Chairman & Managing Director

The NCDs are backed by an unconditional and irrevocable guarantee issued by the Ministry of Consumer Affairs, Food and Public Distribution, the GoI. 

The rating takes into account the structured payment mechanism designed to ensure timely payment of both the principal and the interest amount of the rated instrument, even if the guarantee has to be invoked by the Trustee.

Entity is considered as an extended arm of the Government, in achieving its objectives of providing effective price support to farmers, managing Public Distribution System (PDS) for distribution of subsidized staples to economically vulnerable sections of society, and maintaining strategic reserves to stabilize markets for basic food grains.

7.64%Food Corporation Of India 12 Dec 2029

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INE861G08050

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Food Corporation Of India

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Govt allows FCI to sell wheat from stocks to flour millers, biscuit makers

Centre tweaks FCI funding, helping it to go debt free

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