India could reduce or abolish the import tax on wheat to increase supply and control prices

NEW DELHI, Aug 4 (Reuters) – India is considering cutting or even abolishing a 40% wheat import tax and lowering the limit on the amount of wheat stocks millers and traders can hold, an official said on Friday. of the government, as part of the efforts. to increase supplies.

“We have options such as lowering or abolishing the wheat import tariff and adjusting stock holding limits to control prices,” Sanjeev Chopra, the top official at the Federal Food Ministry, told reporters.

“Options are under consideration. The government is committed to controlling prices,” Chopra said.

india in june tax a limit on the amount of wheat stocks traders can hold in an effort to drive down prices. The government is also offering wheat to bulk buyers, such as biscuit makers, to increase supply on the local market.

Wheat prices in New Delhi have risen 12% in the past four months to Rs 25,174 ($303.85) a metric ton, the highest level in nearly six months, as trade and industry officials say production was affected by erratic weather.

There was no proposal to import wheat from Russia in a government-to-government deal, Chopra said.

Wheat output rose to a record 112.74 million metric tons in 2023, up from 107.7 million metric tons the previous year, according to the Ministry of Agriculture and Farmer Welfare. India consumes about 108 million metric tons of wheat a year.

But a leading trade body told Reuters in June that India’s 2023 wheat crop was at least 10% lower than the Agriculture Ministry estimate.

Still, wheat stocks in government warehouses were at 28.3 million tons against a target of 24.5 million tons.

Decisions to reduce or eliminate the wheat import tax and tighten local stockholding limits would help boost supplies “during the festival season,” said Rajesh Paharia Jain, a New Delhi-based trader.

The demand for festival food peaks around October.

India forbidden exports in May 2022 after a sudden rise in temperatures cut output, even as exports surged to cover the global shortfall caused by Russia’s invasion of Ukraine.

Chicago wheat futures snapped a seven-session slide on Friday on rising tensions in the Black Sea grain export region after a Ukrainian drone strike near Russia’s Novorossiysk export hub reignited sentiment. global supply fears.

Following last year’s wheat export ban, India, which accounts for 40% of world rice exports, last month ordered a arrest to its main export category of rice to calm domestic prices.

Separately, the Food Ministry said on Friday that the country has more than “enough stocks” of sugar. Sugar stocks totaled 10.8 million tons, sufficient for this season’s demand and next season’s optimal carryover stocks of about 6.2 million tons.

($1 = 82.84 rupees)

Reporting by Mayank Bhardwaj and Rajendra Jadhav; edited by Nick Macfie and Jonathan Oatis

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