India is considering cutting or abolishing a 40% import duty on wheat, Food Secretary Sanjeev Chopra said on Friday, as the world's second-biggest producer struggles to contain prices.
Indian imports could lift global prices as supplies have already been disrupted from the key exporting countries in the Black Sea region after a deal allowing safe passage to ships carrying grain for the past year expired in July.
India in June imposed a limit on the amount of wheat stocks traders can hold, for the first time in 15 years, to bring down prices.
"We have options like lowering or abolishing the wheat import duty and tweaking the stock holding limits to control prices," Chopra, the ministry's top civil servant, said. "The options are under consideration."
Chicago wheat futures extended gains to add much as 4.3% following Chopra's comments.
Chopra said there was no plan to import wheat from Russia or engage in a government-to-government deal.
Wheat prices in New Delhi have jumped 12% in the past four months to 25,174 rupees ($303.85) a metric ton, the highest in nearly six months, as traders say production was hit by erratic weather.
According to the government, wheat output rose to a record 112.74 million metric tons in 2023, up from 107.7 million metric tons a year earlier. India consumes around 108 million metric tons of wheat annually.
But a leading trade body told Reuters in June that India's wheat harvest in 2023 was at least 10% lower than the government's estimate.
"The government is very concerned about food prices ahead of elections. It will allow duty-free imports; otherwise, local prices will rise further," said a New-Delhi based dealer with a global trade house.
The festival season would start from the next month, and the government would encourage traders to import wheat before the beginning of the peak festival season in October, the dealer said.
India, which accounts for 40% of world rice exports, last month ordered a halt to its largest rice export category to calm domestic prices, which climbed to multi-year highs in recent weeks as erratic weather threatened production.
($1 = 82.8490 Indian rupees)
