The government is considering a proposal to cut or abolish import taxes on wheat, Food Secretary Sanjeev Chopra said on Friday. This comes as the world's second-biggest producer of the staple struggles to contain price rises.
Chopra said there is no plan to import wheat from Russia or engage in a government-to-government deal.
In recent months, wheat prices in Delhi have surged by 12 per cent, reaching a six-month high of Rs 25,174 per metric ton. This price hike is attributed to erratic weather conditions that have adversely affected production. To counter this, the government imposed a limit on the amount of wheat stocks traders can hold for the first time in 15 years, aiming to drive down prices.
In June, the government imposed a limit on the amount of wheat stocks traders can hold, for the first time in 15 years, to bring down prices.
"We have options like lowering or abolishing the wheat import duty and tweaking the stock holding limits to control prices," Chopra said. "The options are under consideration."
However, these measures have not been sufficient to curb inflation, particularly in cereals. As a result, the government is considering additional options such as lowering or abolishing the wheat import duty and adjusting the stock holding limits. The current wheat-import tariff stands at 40%, having been raised from 30% in April 2019.
Despite a record output of 112.74 million metric tons in 2023, India's wheat harvest was reported to be at least 10% lower than the government's estimate by a leading trade body. This discrepancy, coupled with the country's annual consumption of around 108 million metric tons of wheat, has necessitated the consideration of import tax adjustments.
Chopra clarified that there are no plans to import wheat from Russia or engage in any government-to-government deals. Instead, the focus is on supporting local producers while ensuring the availability and affordability of wheat for consumers.
Chicago wheat climbed 3.5% on Friday after a Ukrainian drone attack near the Russian Black Sea export hub of Novorossiysk rekindled global supply fears while India raised demand expectations by announcing it could scrap an import tax.
Ukrainian sea drones attacked a Russian navy base near the port of Novorossiysk, a major terminal for Russian grain and oil exports.
The civilian port temporarily halted all ship movement before resuming normal operations, according to the Caspian Pipeline Consortium which operates an oil terminal there.
Recently, the government imposed a ban on all exports of non-basmati white rice. This decision was taken to keep domestic prices in check, as they had climbed to multi-year highs due to erratic weather-threatening production. The ban has not only affected the global rice market but also sparked fears of inflation.