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India brings back 10 percent tax on wheat imports

NEW DELHI (Reuters) - India on Tuesday imposed a 10 percent import tax on wheat with immediate effect, government sources said, reinstating the tariff after a gap of nearly four months that saw large overseas purchases.

A labourer loads a bundle of wheat husk in a tractor-trolley at a field in Punjab, May 6, 2015. REUTERS/Ajay Verma/Files

The government wants to curb imports when Indian farmers are starting to harvest their crops, said three sources directly involved in deciding on the issue. They declined to be identified as they were not authorised to speak on the matter.

Earlier this month, government sources had said New Delhi could impose a 25 percent import tax on wheat.

India, the world’s second-biggest wheat producer, lowered the import tax wheat to 10 percent from 25 percent last September and scrapped the duty on December 8.

On Tuesday, the government also imposed a 10 percent tax on Tur, a variety of pulse, after a crash in local prices.

Waves of farmers have stepped up local production of pulses to help the government cut a hefty import bill.

The permission for duty-free imports had encouraged private traders to buy more than 5 million tonnes of wheat since mid-2016 to meet a supply shortfall left by two years of drought.

Most flour millers and biscuit makers imported wheat from France, Ukraine and Australia.

Both large imports and forecasts of a bumper crop prompted the government to impose the tax, the sources said.

The farm ministry last month forecast wheat output at 96.64 million tonnes in 2017, up from 92.29 million tonnes last year.

Reporting by Mayank Bhardwaj; Editing by Joseph Radford