India Considers Reducing or Eliminating Wheat Import Tax to Bolster Supply and Stabilize Prices
August 6, 2023India is contemplating lowering or completely removing a 40% import tax on wheat, and decreasing the limit on wheat stocks held by millers and traders, according to a government official. The move aims to increase wheat supplies and manage escalating prices.
“The options are under consideration. The government is committed to controlling prices,” Sanjeev Chopra, the highest-ranking civil servant at the federal food ministry, announced to reporters.
Earlier in June, the government set a cap on the amount of wheat that traders could stockpile to counter rising prices. Additionally, the government has been offering wheat to bulk buyers, including biscuit manufacturers, to supplement local market supplies.
Wheat prices in New Delhi have surged by 12% over the last four months, reaching 25,174 rupees ($303.85) per metric ton, a six-month high, due to unpredictable weather impacting production. However, Chopra dismissed any plans to import wheat from Russia through a government-to-government deal.
Despite predictions from a leading trade organization in June that India’s 2023 wheat harvest would be at least 10% less than the farm ministry’s estimate, the Ministry of Agriculture & Farmers Welfare reported a record output of 112.74 million metric tons, up from 107.7 million metric tons in the previous year. India’s annual wheat consumption stands at approximately 108 million metric tons.
Government warehouses currently hold wheat stocks amounting to 28.3 million tons, which exceeds the target of 24.5 million tons.
According to Rajesh Paharia Jain, a trader based in New Delhi, the decision to cut or abolish the wheat import tax and modify local stock holding limits would effectively enhance supplies, especially during the festival season when food demand typically peaks around October.
After the sudden temperature rise affected output leading to an export ban in May 2022, India halted its largest category of rice exports last month to stabilize domestic prices.
Meanwhile, the food ministry confirmed that India has more than “sufficient stock” of sugar, with total stocks reaching 10.8 million tons, enough to cover demand for this season and next season’s optimum carryover stocks of approximately 6.2 million tons.
