NEW DEHLI, India —Indian Finance Minister Shri Arun Jaitley announced on Aug. 7 that India is going to impose a basic custom duty of 10% on wheat until March 2016.

Jaitly said in the announcement that the duty will add about 900 million Rupee ($14 million) in revenue in the remaining year.

The decision was made after officials from the ministries of farm, food, trade and finance met to discuss ways to curb imports at a time when domestic stocks are ample thanks to seven years of bumper harvests aided by government subsidies, Reuters reported.

Wheat production in India, the world's second biggest grower, is estimated to have declined to 90.78 million tonnes in 2014-15, compared to record production of 95.85 million tonnes during 2013-14.

In June private firms signed deals to import 500,000 tonnes of premium Australian wheat, the biggest such purchases in more than a decade, which led to criticism that Prime Minister Narendra Modi’s government was letting farmers down.

Some flour millers in India’s port cities contracted to buy the wheat after rain and hailstorms earlier this year damaged crops, especially high-protein varieties used to make pasta and pizzas.

The duty increase could rule out the import of another 500,000 tonnes that had been expected earlier.
A trader in New Delhi said the government may have been forced to move quickly due to fears that some of the 52,500 tonnes of French wheat rejected by Bangladesh over quality concerns could find its way into India.

The trader, who did not want to be named, said at least one of the rejected cargoes was heading towards Tuticorin port in southern India.

“The government didn't want any rejected cargo to come to India because it would have prompted trading companies to divert the rest of their rejected vessels to Indian shores,” he said.