Iraq's decision to resume wheat purchases from India is unlikely to lead to big gains in exports due to transport bottlenecks and unclear government policies, industry officials said on Thursday.

Iraq, which rejected consignments of Indian wheat because of quality concerns in 2001, is willing to start purchases after a delegation from the Grain Board of Iraq inspected cleaning facilities at India's western port of Kandla, traders said.

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

But Iraq rejected the Indian cargoes in May 2001, saying the grain did not meet quality standards. Later, Indian firms set up cleaning facilities at some ports to get rid of grain impurities.

"We are unable to fulfil old contracts because of unavailability of wagons, I don't see big gains from Iraq," a leading Bombay-based exporter told Reuters.

"We will be able to sell to Iraq around 100,000 to 150,000 tonnes and not more because of transport problems," said Atul Chaturvedi, vice president of Adani Exports Ltd.

But Anil Aggarwal, co-chairman of India-Iraq joint business council, said the latest development would open up new export possibilities and the country could sell up to 1.5 million tonnes of wheat a year to Iraq.

Some traders said they would prefer to wait for the first consignment to get approval on arrival in Iraq and then look at further exports to Baghdad.

New Delhi-based Priyanka Overseas Ltd is likely to send the first shipment of around 25,000 tonnes to Iraq within a week.

Traders said Iraq is facing supply problems due to low output in Australia, which is a key exporter to Baghdad. "They do not have many options but to come to India," one trader said.

Exporters say they have not signed any fresh wheat sales contracts after the middle of December since the government stopped issuing rain-damaged wheat from its stockpiles for export, pending an assessment of available grain stocks.

Some traders said the government was deliberately slowing down the export process.

"The government's priority seems to be transporting grains for distribution of wheat to drought-hit states and not exports," he said.

Stocks have fallen because of that and a higher allocation of grains to feed people in drought-hit states.

India began exporting wheat two years ago to cut bulging grain inventories. It aims to export about 4.2-4.5 million tonnes of wheat in 2002-03 (April-March).