NEW DELHI/MUMBAI, June 2. (Reuters): India is poised to begin wheat imports after a six-year gap, to replenish depleted reserves and hold down prices that leaped following three years of disappointing crops, sources say, as the approaching end of general elections removes a key hurdle.
New Delhi is expected to abandon a 40 per cent tax on wheat imports this year, officials and other sources told Reuters, paving the way for private traders and flour millers to buy from producers such as top exporter Russia, albeit in modest volumes.
As the new-season wheat harvest rolls in, the government is likely to wait until after June to scrap the import tax, in time for Russia's harvest, the sources said.
While New Delhi's import requirements are not huge, they could help lift global prices. Benchmark wheat prices in Chicago jumped this week to their highest in 10 months, before edging lower on Wednesday as hopes for rain in parched Russian sowing areas led investors to lock in profits.
Despite the recent surge in global wheat prices, fuelled by worries that adverse weather conditions could cut output in Russia, industry insiders said duty-free imports were viable.
"There is a compelling case for the removal of the wheat import duty," said Pramod Kumar, president of the Roller Flour Millers' Federation of India. "That is the best possible way to ensure sufficient supplies in the open market."
The government is likely to concede to the demand.
"The considered view is that the wheat import duty should be removed after June, so that the private trade can import wheat," said a government source aware of the matter.
Prime Minister Narendra Modi's Bharatiya Janata Party is widely expected to win the election, which ends on June 1, with vote-counting set for June 4.
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