India likely to abolish 40% import tax on wheat: Report

The Indian Government is contemplating cutting off the import tax on wheat, a report said. Indian is the second biggest wheat producer of the world. The move aims to make buying the grain from overseas more attractive, the report says. 

The Indian Government in mulling a proposal to scrap a 40% duty on wheat imports, Bloomberg reported. 

The report has stated that the only deliberations are being made, there is no certainty that the tax cut on import of wheat will be implemented. 

This is a big move if India decides to import wheat. The last time India imported significant amount of wheat was in 2017-18.

After Russia’s invasion of Ukraine, Prime Minister Narendra Modi declared that his country was ready to “feed the world,” but changed course weeks later by restricting wheat exports to protect its own food supplies. 

Two weeks ago, India, which dominates global rice trade, banned the export of some varieties to control domestic food costs, sending rice prices in Asia to a three-year high, Bloomberg reported. 

The Bloomberg report notes that the move if implemented will benefit flour millers in southern India, especially those located near coastal areas. It would make it cheaper for them to buy overseas wheat such as from the Black Sea, where Russia is expected to ship record volumes for the second year in a row, and Australia.

The wheat prices in India has risen in the past year, contrary to the dip that the world saw. Global wheat prices dropped 18% in the past year, retail prices in New Delhi were 17% higher Thursday than a year ago. 

Soaring food costs pushed inflation to a three-month high in June and may even send it back above the central bank’s 6% target ceiling, said Bloomberg. 

There are signs India’s most-recent wheat harvest suffered another year of weather damage. Excessive rain in March hit the crop at a vital grain-filling stage. While the farm ministry predicted that production would climb to an all-time high of 112.7 million tons, other forecasters were less upbeat. 

A flour miller group estimated that the harvest was just 102.9 million tons.

(With Bloomberg inputs)