RPT-UPDATE 1-India trade secy says favours wheat exports

(Repeats story issued late on Tuesday) (Adds details, background)

NEW DELHI, May 4 (Reuters) - India’s trade ministry is in favour of wheat exports as the country has a huge surplus, but the decision to lift the three-year old ban on overseas sales of the grain would be taken by the farm ministry, a top official said on Tuesday.

“We are in favour of wheat exports considering the good wheat harvest, but the final decision will be taken by the agriculture ministry,” Trade Secretary Rahul Khullar told reporters.

India’s 2010 wheat crop, currently being harvested, is expected to soar to 82 million tonnes and exceed local demand for the fourth consecutive year. Wheat stocks had swelled to 16.1 million tonnes on April 1, four times the target.

India stopped exports of wheat in early 2007 and non-basmati rice in 2008 to ensure smooth domestic supply at reasonable rates, but food prices have risen sharply since the failure of last year’s June-September monsoon.

Widespread protests against rising food prices has made the government cautious about any move to ship out grain even though the country has a huge wheat surplus.

But the government has already allowed state-run firms to ship small quantities of wheat to neighbours Sri Lanka and Nepal, but analysts say India must export more wheat to accommodate the new crop as it is running out of storage space. (Reporting by Manoj Kumar and Matthias Williams, Writing by Himangshu Watts; editing by Malini Menon)