Indian wheat exporters are hopeful that deals to export 600,000 tonnes of wheat to Iraq, invaded by US led forces last week, would still be honoured but are unclear about future business prospects, industry sources said on Wednesday.

"We are quite sure that existing contracts with Iraq will get executed," said Anil Aggarwal of the India-Iraq Joint Business Council.

However, he said it was still not clear when ships waiting to deliver to Iraq's deep water Umm Qasr port in the Middle East Gulf would be able to berth following the fighting in the area.

R K Jain, managing director of New Delhi-based Priyanka Overseas Ltd, said two of the company's ships carrying wheat and sugar were waiting to berth at Umm Qasr.

Australian foreign minister, Alexander Downer, said he was hopeful mine clearing in Umm Qasr waters would be completed by Thursday so that wheat aid shipments could be made.

Besides wheat, India annually exports about 25,000 tonnes of sugar and 40,000 tonnes of tea to Iraq, traders said.

Several Indian firms won contracts in 2001 to supply 600,000 tonnes of wheat to Iraq under the UN oil-for-food programme.

After Iraq had rejected several cargoes over quality standards, Priyanka Overseas discharged 22,000 tonnes at Umm Qasr in February to mark the first successful delivery under the 2001 contracts.

Uncertain future

India is expected to produce high-protein wheat this summer but any fresh contracts from Iraq will depend on who takes charge of the country, traders said.

"We have been doing good business with Iraq because of our friendly ties with the Iraqi government," said Aggarwal.

Some traders said New Delhi would have to compete with other exporting nations to get business in Iraq, but had an edge in selling traditional items like tea.

"Wheat might be difficult because America itself is a big wheat exporter and they have good stocks," a trader said.

Traders said India is likely to produce around 70 to 71 million tonnes of wheat this year, down from 74.4 million tonnes in the previous year, after a lack of rainfall in central and western regions.

Indian wheat exports have slowed down in the past months due to uncertainty over whether the government plans to continue with an aggressive export policy, but they could pick-up after the current crop is harvested.

"The crop is good in northern areas and the harvesting will get over by May," a leading trader said from Khanna, the largest grain market in Asia. "After the harvesting the government might give priority to exports again because its granaries are going to be full."

Indian wheat exporters had complained that railway wagons were not being made available to move wheat from landlocked states to the ports for exports.