Trading firms including Glencore and Cargill bid at between $265.50 to $296 per tonne, officials and trade sources said.

India paid an average $230 per tonne for imports in 2006 when it was forced to tap global markets for 5.5 million tonnes.

India is looking to import one million tonnes but traders say it may have to buy far more as purchases from local farmers lag.

Freight rates increase
It is buying wheat for a second year to boost reserves as demand exceeds production. The purchases come at a time when freight rates have climbed to more than a two-year high as China and India, the world's two most-populous nations, buy more grain and iron ore.

Wheat prices have advanced 11% in the past year as bad weather damaged crops from US to Australia.

Indian output has been stagnating around 70 million tonnes annually while consumption has been steadily growing.

This year, the harvest is forecast at 73.3 million tonnes, up from 69.4 million in 2006, according to the farm ministry.