India is poised to begin importing wheat after a six-year hiatus, as the government looks to replenish depleted reserves and hold down prices that have surged following three years of disappointing domestic harvests.
According to sources, New Delhi is expected to abandon the current 40% tax on wheat imports this year, paving the way for private traders and flour millers to purchase from major exporters like Russia. This move is likely to come after the conclusion of the ongoing general elections in June, which has been a key hurdle so far.
“There is a compelling case for the removal of the wheat import duty,” said Pramod Kumar, president of the Roller Flour Millers’ Federation of India. “That is the best possible way to ensure sufficient supplies in the open market.”
The government source, speaking on condition of anonymity, confirmed that the “considered view is that the wheat import duty should be removed after June, so that the private trade can import wheat.” However, to protect the interests of domestic farmers, the duty is expected to be reinstated before the wheat planting season starts in October.
Traders say they will start importing as soon as the government scraps the 40% duty. Rajesh Paharia Jain, a New Delhi-based trader, estimates that about 3 million metric tons of imports would be sufficient, with Russia being the likeliest supplier.
The need for imports arises after five consecutive record wheat harvests in India were followed by a sharp drop in production in 2022 and 2023 due to a rise in temperatures. This has prompted the world’s second-largest wheat producer to ban exports, leading to a surge in domestic prices.
Imports would help avert a further price spike after the October demand peak for the festival season and eliminate the need for the government to sell large quantities from its reserves, according to a New Delhi-based dealer with a global trade house.
The move to allow wheat imports comes as a relief for both consumers and the government, which has been grappling with the challenge of ensuring adequate supplies and stable prices in the run-up to the elections.