Import duty on wheat scrapped to improve domestic consumption

Import duty on wheat scrapped to improve domestic consumption

Indian flour mills have already contracted to import three lakh tonnes from Australia and France for shipment in July- September.

The Dollar Business Bureau

The Govt has scrapped the 10% import duty on wheat with immediate effect due to imminent shortage of wheat on the back of severe drought that wheat producing states faced last couple of years.

The Finance Minister Arun Jaitley made the announcement in the Parliament on Thursday, stating that import duty on wheat had been reduced to nil from 10% without an end-date. It should be recalled that the government had in Sept lowered the import duty on wheat from 25% to 10% till February.

This move comes in the wake of increasing wheat prices in the country and also to increase wheat stocks in the market. Private traders had imported nearly 1.72 million tonnes (MT) of wheat so far and it is expected that the total inbound shipments could cross 2MT this year.

"The government is keeping a close watch on wheat prices. So keeping in mind the recent rise in price trend of wheat, We can rollback the import duty on wheat. We dont want extra burden on consumers," Food Minister Ram Vilas Paswan today said.

He added that wheat procurement is so far down by 50 lakh tonnes to 229 lakh tonnes compared with 280 lakh tonnes in the year ago period.

In March, the government had extended the import duty on wheat by another three months, till June, to curb imports as domestic production is estimated to rise by over 8 per cent this year.

Indian flour mills have already contracted to import three lakh tonnes from Australia and France for shipment in July- September.

Last year too, private millers had purchased about 5 lakh tonnes of wheat from Australia for the first time in a decade due to sluggish supply of domestic high protein wheat and lower international prices.

As on April 1, state-owned FCI had a stock of 30 million tonnes of wheat, much higher than the actual requirement of 7.46 million tonnes.

Despite drought in over 10 states, wheat production has been pegged at 94.04 million tonnes for 2015-16 crop year (July-June) compared with 86.53 million tonnes in the previous year, as per Agriculture Ministry’s third advance estimate.

The Dollar Business Bureau - Dec 08, 2016 12:00 IST
 
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