Issue of Wheat Import by India

Source: The post Issue of Wheat Import by India has been created, based on the article “WILL INDIA IMPORT WHEAT?” published in “Business standard” on 6th June 2024.

UPSC Syllabus Topic: GS Paper3-economy- transport and marketing of agricultural produce and issues and related constraints

Context: India is considering reducing wheat import duties due to lower domestic supplies and high market prices. The government might need to import wheat to stabilize prices, despite having more wheat this year compared to last year. Improving wheat yields is suggested as a long-term solution.

For detailed information on How India’s agricultural exports fell read this article here

What is the current situation in the Indian wheat market?

India is facing high wheat prices in the market, which are much higher than the government’s minimum support price. For instance, prices reached around ₹3,000 per quintal in some parts of Madhya Pradesh, while the official price is ₹2,275 per quintal. Due to this increase, there is a discussion about reducing the 44% import duty on wheat to allow imports and help stabilize prices.

Why might India consider importing wheat?

1. The consideration for importing wheat, potentially 2 to 4 million tonnes, comes as domestic procurement has not met the target of 30 to 32 million tonnes for three years.
2. This shortage in state procurement and the high market prices have led to discussions on easing import norms to bring down prices and discourage hoarding.

What is the government’s strategy?

1. The government might have nearly 8.5 million tonnes of wheat to manage market prices this year, compared to 10 million tonnes last year.
2. This wheat will be used in open market operations and possibly through schemes like the Open Market Sale Scheme to control prices.
3. The overall production is also reported to be better than last year, with an estimate showing an increase of 2.4 million tonnes.

What are the long-term solutions?

1. Increase Wheat Yields: Boost the average yield from the current 3.7-3.8 tonnes per hectare to at least 5 tonnes per hectare. Competing countries like Mexico and China have yields close to 6 tonnes per hectare.
2. Address Agricultural Challenges: Implement measures to combat losses due to weeds and pests, which can reduce potential yield by 20 to 30 percent, and correct nutritional imbalances.
3. Enhance Wheat Varieties: Develop and distribute varieties that can resist terminal heat and other climatic challenges.

Question for practice:

Discuss the reasons behind India’s consideration to import wheat and the expected effects on the domestic market.