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India is poised to begin wheat imports after a six-year gap, to replenish depleted reserves and hold down prices that leaped following three years of disappointing crops, sources say, as the approaching end of general elections removes a key hurdle.

New Delhi is expected to abandon a 40% tax on wheat imports this year, officials and other sources told Reuters, paving the way for private traders and flour millers to buy from producers such as top exporter Russia, albeit in modest volumes.

As the new-season wheat harvest rolls in, the government is likely to wait until after June to scrap the import tax, in time for Russia's harvest, the sources said.

"There is a compelling case for the removal of the wheat import duty," said Pramod Kumar, president of the Roller Flour Millers' Federation of India. "That is the best possible way to ensure sufficient supplies in the open market."

The government is likely to concede to the demand.

"The considered view is that the wheat import duty should be removed after June, so that the private trade can import wheat," said a government source aware of the matter.

"And to protect our farmers' interest, the duty should be reinstated before wheat planting starts in October," added the source, who spoke on condition of anonymity to describe the likely course of action by the next government.

Prime Minister Narendra Modi's Bharatiya Janata Party is widely expected to win the election, which ends on June 1, with vote-counting set for June 4.

Traders say they will start importing if the government scraps the 40% duty.

Rajesh Paharia Jain, a New Delhi-based trader, said about 3 million metric tons of imports should be sufficient, with Russia the likeliest supplier.

"Once the government removes the duty, private trade can start importing wheat," he said.

Imports would avert a price surge after October's demand peak for the festival season, said a New Delhi-based dealer with a global trade house.

Imports of 3 million to 5 million metric tons would eliminate the need for New Delhi to sell large quantities from reserves, he added.

After five consecutive record harvests, a sharp rise in temperatures shrivelled India's wheat crop in 2022 and 2023, prompting the world's No. 2 producer to ban exports.

Even this year's crop will be 6.25% lower than a government estimate of 112 million metric tons, a leading industry body forecasts.

Domestic prices have stayed above the state-set minimum purchase rate of 2,275 rupees per 100 kg, and have started rising recently.

DEPLETED RESERVES

Wheat stocks in state warehouses dropped to 7.5 million metric tons in April, the lowest in 16 years, after the government was forced to sell more than 10 million tons, a record, to flour millers and biscuit makers to tame prices.

"The removal of the import duty will help us ensure that our own reserves don't fall below a psychological benchmark of 10 million tons," said the government official.

New Delhi has struggled to replenish state wheat stocks.

Since the harvest began in April, the government managed to buy only 26.2 million metric tons against a target of 30 million to 32 million.

That was despite its advice to trading houses to refrain from purchases to enable state stockpiler the Food Corporation of India to procure large quantities.

State procurement is unlikely to cross 27 million metric tons, the New Delhi-based dealer with a global trading house said.

New Delhi needs nearly 18.5 million metric tons of wheat as part of the world's biggest food welfare programme.

India's main opposition Congress party has promised a monthly supply of 10 kg of free grain to programme beneficiaries if voted to power, or double what Modi's government provides now.

POLITICAL COMPULSION

   New Delhi has resisted calls for wheat imports as overseas purchases risk angering farmers, an influential voting bloc, but the limitation ends with the mammoth six-week-long election.

   New Delhi's import requirements are not huge but could help lift global prices. Benchmark wheat prices in Chicago jumped this week to their highest in 10 months, fuelled by concerns over crop losses in the Black Sea region.

    "Despite the recent rise in global prices, imports at zero duty are economically viable, and that's why the new government should remove the duty to enable the trade to import," said Kumar, the flour milling official.