India increases wheat import duty to 20% on ample supply forecast

India, one of the world’s biggest consumers of wheat, has increased its wheat import duty from 10% to 20%, according to a government order released Wednesday.

India shifts between being a net importer and exporter of wheat depending on the fortunes of its crop. According to IGC data, last marketing year India imported 6.3 million mt and exported 400,000 mt, while this marketing year it is forecast to import 4 million mt and export 300,000 mt.

With India forecast to produce 112.2 million mt of wheat in the 2017/18 marketing year – up 4.6 million mt from last year, according to IGC data – stemming the tide of cheap imports is a key issue while global wheat prices remain depressed.

Import duties on agricultural products are an especially complex affair in India given the size of its population and the importance of the rural economy to overall employment levels. Around half of the population is employed in the industry, estimates from the International Labour Organization suggest.

And with regional legislative elections in 2018 - including those in key wheat growing areas of Madhya Pradesh and Rajasthan - the ruling Bharatiya Janata Party is keen to hold on to its position.

It has previously shown a willingness to provide indirect assistance to farmers, as it did with sugar cane farmers in Uttar Pradesh prior to elections earlier this year.