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The government will impose an import duty of 10% on wheat effective until March 31 next year, Finance Minister Arun Jaitley told Parliament on Friday, reinstating tariffs after a gap of eight years following big purchases in recent months.
Reuters reported last week that a decision was taken after top officials from the ministries of farm, food, trade and finance met to discuss ways to curb overseas purchases when domestic stocks are ample.
In June, some private firms signed deals to import 500,000 tonne 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.
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, announced on the website of the upper house of parliament, could rule out the import of another 500,000 tonne 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 tonne 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.
