India Reconsidering Wheat Import Tax

Two sources in the Indian government told Reuters this week that India could impose a 25-percent import tax on wheat by the middle of March. That move would reinstate the tariff after a three-month gap as a response to recent large purchases from overseas.  India is the world’s second-biggest wheat producer.

The government lowered the tariff from 25 percent to 10% in September of 2016 before scrapping it entirely on December 8.  After that move, private traders signed deals to import more than 5 million tons of wheat to help ease a supply shortage after two years of drought.

Higher imports and expectations of a bumper crop this year have government officials seriously thinking about re-instituting the import tax. The Prime Minister of India and government officials want to curb imports to avoid a crash in local wheat prices, which would bring on a backlash from millions of poorer citizens. Many businesses that use wheat find it cheaper to import the product from Australia rather than purchase it from the main wheat-growing areas in their own country.

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