UPDATE 2-India to allow 2 mln T of wheat exports after polls

* India to allow 2 mln T wheat exports after poll

* Traders say need subsidies to compete in global market

* Quality of Indian wheat, a key issue for traders. (Adds details, quotes and background)

NEW DELHI/SINGAPORE, May 14 (Reuters) - India reaffirmed plans to allow exports of 2 million tonnes of wheat after its election process ends but traders said on Thursday only a government subsidy would make exports viable and grain quality was a concern.

India banned wheat exports in early 2007 and stopped shipments of non-basmati rice last year to shore up supplies at home, but a record harvest followed by massive purchases by government agencies has left it with an almost unmanageable surplus.

"The Group of Ministers had taken a decision to allow 2 million tonnes of wheat for exports," Trade Secretary G.K. Pillai told reporters. "The process is underway. The exports will be allowed after elections."

Official election results will be announced on Saturday.

A Singapore-based traders who sells Australian and Black Sea wheat in Asia said there were concerns about the quality of wheat stored by the Food Corp of India (FCI), an official agency that buys grains from farmers at state-set rates.

"Wheat that is stored in FCI warehouses is old, some of it is badly stored and some is in good shape, so there is so much variety in quality, he said.

"People don't know what they are getting, if you buy Australian wheat you know what you are getting," he said.

Black sea milling wheat was quoted at $235 a tonne, including cost and freight (c&f) to Southeast Asia, while Australian wheat was priced at $265 a tonne and U.S. soft white wheat was $285.

India, which sets the price of wheat it buys from farmers, announced a minimum support price for wheat of 1,080 rupees per 100 kg, or $220 per tonne, to ensure adequate returns for farmers.

Traders say this will allow them to deliver wheat in Southeast Asia at about $235-$240 per tonne.

A panel of Indian ministers agreed on March 5 to lift a ban on wheat exports after elections but traders said the decision of the outgoing government would not be binding on a new government.

Traders said the government would have to provide sufficient subsidies for exports as Indian prices were too high to make shipments viable.

Pillai also said there were no immediate plans to allow exports of non-basmati rice.

An Indian newspaper reported on Thursday the government might allow a further one million tonnes of non-basmati rice to be exported to Africa, taking overseas sales to 2.5 million tonnes. (Reporting by Mayank Bhardwaj and Rajkumar Ray in NEW DELHI and Naveen Thukral in SINGAPORE; Editing by Sue Thomas)