Reliance Becomes no 2 Exporter After Wheat Ban, Says Report

Multibillionaire Mukesh Ambani’s Reliance Industries, which entered the business of trading grain after India's wheat export ban earlier this year has since quickly become the country’s second-largest wheat exporter in the period after the ban, according to a report by Al Jazeera.

Reliance had been the notable exception during the sudden announcement of wheat export ban in May 2022, when it was able to participate in the trade as it had the requisite paperwork being demanded by the commerce ministry at the time. Only those exporters who had a bank guarantee – an irrevocable letter of credit (LC) – issued on or before that date, would be allowed to export wheat.

The unusual condition caught the industry off guard as most Indian exporters typically don’t use an LC, several traders Al Jazeera spoke to said.

One of the only firms that use LCs as part of normal business practice is India’s largest wheat exporter, ITC Ltd. But even ITC was caught on the back foot because it had yet to get LCs for future shipments, Al Jazeera claimed.

On May 13, however, there was another company that had an LC ready – Reliance Retail, which had at least one LC for $85m issued on May 12 for it to buy about 250,000 metric tonnes of wheat. 

Some traders had filed for LCs on May 13, and they pleaded with the government to include them in those allowed to export, but the government rejected the pleas, insisting that only existing LCs counted

India restarted its exports around May 22, allowing only companies with LCs dated May 13 or earlier to ship wheat.

Of the 2.1 million tonnes of wheat that has sailed or is in the process of being shipped since, about 334,000 metric tonnes belongs to Reliance, second after ITC’s 727,733 metric tonnes, according to port data as of August 16.

Reliance appears to have been preparing for agricultural exports since last year. The first hint was a stock exchange filing last October where it said it had newly incorporated wholly-owned subsidiary Reliance International Limited in Abu Dhabi to undertake activities relating to, among others, trading crude oil and agricultural commodities.

The newly incorporated unit is expected to supply both the company’s exports and its domestic business, industry watchers say.

The wheat export restrictions have given Reliance an opportunity to impact the domestic market as well, where it buys vast quantities of grain for its private-label products sold across its chain of more than 15,000 Reliance Retail shops.

Last week, Reliance Retail turned out to be the highest bidder to purchase wheat stocks from the states of Haryana and Madhya Pradesh. As per that tender, the governments were looking to sell 100,000 tonnes of wheat, with a minimum bid of 5,000 tonnes. In the past, Reliance has bought smaller quantities, industry players say.