India imposes limits on wheat stocks, may turn to imports if required

A veiled woman farmer harvests a wheat crop in a field on the outskirts of Ajmer

By Mayank Bhardwaj

NEW DELHI (Reuters) - India has imposed limits on wheat stocks that traders can hold, and it may abolish or trim the import tax on the grain to keep prices low, a senior government official told reporters on Monday.

Wheat prices in India, the world's second-biggest producer of the grain, have been rising in recent weeks because of concerns over supplies.

"Imposing stock limits was just one option. We have many other tools at our disposal to ensure that wheat prices do not rise abnormally," food secretary Sanjeev Chopra told reporters.

The government can consider other options like reducing import duty or allowing duty free imports, he said.

New Delhi imposes a 40% tax on wheat imports. The reduction could allow private traders and flour millers to buy from producers such as top exporter Russia, for the first time in six years.

The imports would help India replenish depleted reserves and hold down prices that leaped following three years of disappointing crops.

There is no shortage of wheat in the country, Chopra said.

Wheat stocks in state warehouses dropped to 7.5 million metric tons in April, the lowest in 16 years, after the government was forced to sell more than 10 million tons, a record, to flour millers and biscuit makers to tame prices. On April 1, 2023, wheat stocks in government warehouses totaled 8.2 million metric tons.

India banned exports of wheat in 2022 and there is no proposal to lift the ban on the exports, Chopra said.

Separately, there is no proposal to lift export curbs on sugar and rice, he added.

India is the world's biggest exporter of rice and the second-biggest producer of sugar.

(Reporting by Mayank Bhardwaj, writing by Rajendra Jadhav; Editing by Himani Sarkar and Anil D'Silva)