Pune: India’s wheat imports could surge to a decade high in 2016-17, forcing the country to look at cutting import taxes after back-to-back droughts has reduced output amid rising demand, a leading consumer products company said on Friday.
India may import 5 million tonnes (mt) of wheat in 2016-17, while the country’s output of the grain could decline by an annual 2.3% to about 85 mt, said S. Sivakumar, group head of agri and IT businesses at ITC Ltd.
A diversified multibillion dollar group, ITC is one of India’s top agribusinesses and a leading private wheat buyer.
At 5 mt, India’s wheat imports would be the highest since 6.7 mt arrived in 2006-07 and way above 500,000 tonnes of last year, data from the US Department of Agriculture (USDA) shows.
Higher-than-expected wheat imports by India, the world’s second largest producer and consumer of the grain, could boost benchmark wheat prices. India had set a targets to produce 94 mt this year.
Traders said that with the likely shortfall in output, the government’s procurement for supplies to the public distribution system and buffer stocks had fallen below targets this year.
USDA says India’s wheat stocks will drop to 17.2 mt in 2015-16 from a record 24.2 mt two years ago.
Wheat procurement by government-run agencies is about 23 mt so far against 28 mt a year ago.
Indian millers have signed deals to import at least 500,000 tonnes of French wheat this year for shipment between July and September, trade people told Reuters in May.
“If government agencies like State Trading Corp. and MMTC Ltd start imports, then total imports would be much higher. Private players alone can’t import huge quantities," said B. K. Anand, head of grains and oilseeds at Cargill India.
Last year India agreed for a 5.2% rise in price it pays for buying wheat from farmers.
India levies a 25% import tax on wheat.
“At some point the government has to take a call on the import duty. The government has taken care of farmers by raising support price. Now it’s time to think about consumers," said Sivakumar. Reuters