India Follows Through – Raises Wheat Import Tax from 10% to 25%
There has been recent speculation surrounding the possibility that India will raise its import tax on wheat from 10% to 25% to fend off cheaper foreign imports. This week, the India government announced the increase of its wheat import tax to 25% to be in effect until March 2016. In August of this year, the government imposed a tax of 10% for the first time in nine years after a spike in overseas purchases of high-protein wheat varieties by private firms as the domestic crop was damaged by hail and rain earlier this season.
India is the world’s second biggest wheat producing country, however, output this season has fallen to 88.94 million tons from a record harvest of 95.85 million tons in 2013/14. Even with the smaller harvest, India still has massive stocks of wheat totaling over 34 million tons resulting from a high carry-over from prior years and a high rate of procurement.
Both the country’s food ministry and its agriculture ministry were in favor of the higher import tax, hoping that it will help protect the country’s domestic market.