Assessing the Recent Shift in the Price Relationship Between India’s and Global Grain Markets

In response to the Coronavirus (COVID-19) pandemic that began in 2020 and a year of unprecedented food inflation, India’s Government doubled the amount of wheat and rice provided to food insecure households through its food distribution programs. In the 2020–2024 period following India’s food distribution program expansion, India’s Government also implemented trade restrictions. An exception to these trade restrictions, however, is the recent allowance of genetically engineered soybean product imports, which were historically banned. Although some food distribution program details and trade restrictions have changed, these policies remained in effect through April 2024. This report empirically investigates the underlying price relationship between international grain and oilseed prices and domestic market prices in India before and after implementing a new policy framework. The report finds a substantial shift in the long-term price relationship between India’s domestic and international grain markets except for soybeans. The report also finds that India’s domestic rice, wheat, and corn prices are less dependent on international prices after the new policies were introduced. However, domestic soybean product prices in India have become more dependent on international soybean prices.