Following two consecutive years of reduced crop yields, Indian wheat stocks held in government warehouses have reached their lowest level in 16 years. In response to this decline, New Delhi has undertaken record sales to bolster domestic supplies and mitigate local price increases.
As of the beginning of April, wheat reserves in state stores stood at 7.5 million metric tons, a decrease from 8.35 million tons a year earlier. This marks a substantial drop compared to the average wheat stocks of 16.7 million tons on April 1 over the past decade. The reduction in stocks is attributed to the record sale of 10 million tons last year, aimed at stabilizing prices.
Despite the tight supply, the Indian government has refrained from incentivizing imports by reducing or eliminating the current 40% tax, or by directly procuring from major suppliers such as Russia. Instead, it has utilized state reserves to sell wheat to bulk consumers, such as flour millers and biscuit-makers, in an effort to curb domestic prices that have exceeded the state-fixed minimum buying price since the last crop was harvested.
The government is determined to maintain wheat stocks above the buffer norm of 7.46 million tons on April 1, with plans to ensure that stock levels do not fall below 10 million tons in the future. To achieve this, the government aims to procure 30 million to 32 million tons of wheat from farmers this year, following previous shortfalls in wheat procurement due to heat waves impacting crop size.
In light of potential challenges in meeting the procurement target, there is speculation that duty-free imports might be considered after the general election if the required quantity is not secured.