India has decided to introduce an import duty of 10 percent on wheat after a gap of eight years, government sources said, after senior civil servants met to discuss ways to curb overseas purchases when domestic stocks are ample.

Last month some private firms signed deals to import 500,000 tonnes of high-protein Australian wheat in the biggest such purchases in more than a decade that led to criticism Prime Minister Narendra Modi’s government was letting down farmers.

India is the world’s second largest wheat producer and consumer after China, and its warehouses often hold double the target amount as farmers get more incentives to produce grains than oilseeds and pulses, which it imports heavily.

Top officials from the ministries of farm, food, trade and finance have now agreed to bring in a duty for the first time since 2006 to cut imports, said a high-level source directly involved in making the decision on the duty.

Another official involved in the discussions confirmed the meeting and its outcome.

The senior source said the duty is all but finalised, but did want to comment in public as it needs to pass through by Modi’s office. A spokesman for Modi could not be reached for comment outside regular business hours.

India was forced to import millions of tonnes of expensive wheat from Russia and Australia in 2006/07 after unusually high temperatures wilted its own crop.

Since then, bumper crops have made India an occasional exporter though production fell 5.1 million tonnes to 90.8 million tonnes this harvesting season – the first fall since 2007 due to unseasonable rains in February and March.

Source: Reuters.in