The Centre may scrap a 40% duty on wheat imports to bring down domestic prices.
Government and trade officials told Reuters on Monday that the Centre could get rid of a 40% duty on wheat imports and limit the amount of stock traders can hold to try to bring down record-high domestic prices in the world’s second-largest wheat producer.
In May, the Center stopped wheat from shipping to the country because of a heat wave, but prices in the country still hit a record high. Still, prices on the international market are still a lot higher than prices on the domestic market. This makes it impossible for traders to buy from abroad.
If the government does get rid of the duty and international prices fall at the same time, traders say they might start importing, especially during the coming festival season, when more people want to buy goods and domestic prices usually go up because of this.
‘We are looking at all possible ways to lower prices,’ said a high-level government official who met with business leaders last week.
‘New Delhi could get rid of the 40% import duty and put stock limits on wholesalers and traders to show the market that the government will do everything it can to keep prices down,’ said an official who didn’t want to be named because the subject was so sensitive.
Domestic wheat prices ended last week at a record high of 24,000 rupees per tonne, up 14% from their lowest point after the government shocked the markets on May 14 by banning exports. This ended hopes that India could fill the gap in the market left by Ukraine’s missing grain.
A trader from a global trading company based in Mumbai said that Indian wheat is the cheapest in the world because its domestic prices are still about a third less than those around the world. India last brought wheat into the country in the 2017-18 fiscal year.
‘If global prices drop by another 20% and Indian prices keep going up, then maybe imports will be possible in a few months,’ the trader said. Also Read | Wheat prices rise in international markets due to India’s ban on exports, Russian war: FAO.
A dealer with a global trading firm in New Delhi said that the government doesn’t have many ways to change the market this year because the amount of goods it buys has dropped by 57% to 18.8 million tonnes.
‘After nine months, the new crop would be ready for harvest and available. To avoid a shortage, the government has to be very careful with the stocks until then’ said the dealer.