On Friday, Food Secretary Sanjeev Chopra announced that the government is contemplating a plan to reduce or eliminate import duties on wheat. This decision arises as the world’s second-largest producer of this essential crop grapples with efforts to curb the escalation of prices.
Chopra clarified that there are no intentions to import wheat from Russia or pursue any government-to-government agreement regarding the matter.
Over the past few months, wheat prices in Delhi have experienced a notable increase of 12 percent, reaching a six-month peak at INR 25,174 per metric ton. This upward trend in prices is attributed to unpredictable weather patterns that have negatively impacted production. In response, the government has taken a significant step by imposing restrictions on the quantity of wheat stocks that traders can retain. This marks the first instance of such restrictions in 15 years, with the objective of reducing prices.
Read More: Wheat stockholding limits introduced by Indian government for the first time in 15 years
In June, for the first time in 15 years, the government implemented a restriction on the quantity of wheat stocks that traders can retain with the aim of lowering 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.”
Despite these measures, inflation, especially in cereals, has not been adequately controlled. Consequently, the government is contemplating further options to address the situation. This includes the possibility of reducing or eliminating the import duty on wheat and making adjustments to the stock holding limits. As of now, the wheat-import tariff stands at 40%, having been raised from 30% in April 2019.
In 2023, India achieved a historic production of 112.74 million metric tons of wheat. However, a prominent trade organization reported that this harvest fell short by a minimum of 10% compared to the government’s projection. This variance, combined with India’s yearly wheat consumption of approximately 108 million metric tons, has prompted a need to explore potential revisions to import taxes.
Chopra made it clear that importing wheat from Russia or participating in any government-to-government agreements is not part of the plan. Instead, the emphasis is placed on bolstering domestic producers and guaranteeing the accessibility and cost-effectiveness of wheat for consumers.
On Friday, Chicago wheat experienced a 3.5% increase following a Ukrainian drone attack close to the Russian Black Sea export center in Novorossiysk. This event reignited concerns about global supply, while India contributed to demand projections by revealing the possibility of eliminating an import tax, further influencing market dynamics.
Sea drones of Ukrainian origin launched an attack on a Russian naval facility situated near the port of Novorossiysk, a significant hub for Russian exports of grain and oil.
According to the Caspian Pipeline Consortium, which operates an oil terminal in the area, the civilian port suspended all ship movements temporarily before later resuming normal operations.
Recently, the government’s decision to ban all exports of non-basmati white rice has captured attention. This move was driven by the need to stabilize domestic prices, which had escalated to multi-year highs due to volatile weather patterns jeopardizing production. However, this export ban has not only reverberated through the global rice market but has also sparked concerns about potential inflationary effects.
Read More: India prohibits non-basmati white rice exports amidst supply concerns
Also Read: India’s rice export ban triggers panic buying among NRIs in the US
