Govt scraps wheat import duty to improve domestic availability, check prices

The central government has slashed the import duty on wheat from 10 percent to nil to improve domestic availability in the wake of increasing prices and concerns about a dismal wheat crop in view of IMD's forecast of warmer winter. 

Meanwhile, Consumer affairs secretary welcomes zero import duty on wheat, saying this will boost domestic supplies and bring down prices.
The notification scrapping the wheat import duty was tabled by Finance Minister Arun Jaitley in Lok Sabha on Thursday.

He said the notification dated December 8, 2016, seeks to further amend the March 17, 2012, order so as "to reduce the import duty on wheat from 10 per cent to nil without an end date, with immediate effect".

Consumer Affairs Secretary Hem Pande has welcomed the move, saying this will improve the domestic availability and control rising prices of value-added products of wheat like wheat flour.

"We had recommended long back to bring down the import duty on wheat. There is some increase in retail prices of wheat and wheat flour. The move should increase local supplies and curb price rise," Pande told reporters on the sidelines.

In September, the government had lowered wheat import duty to 10 per cent from 25 per cent till February 2017.

Private traders have imported 1.72 million tonnes (mt) of wheat so far and the total in-bound shipments are expected to cross 2 mt this year.

More imports are required because the industry says there is genuine shortage because of fall in the domestic output in 2015-16 crop year to 86 mt even though the agriculture ministry does not agree to it and is still putting wheat output at 93.50 mt.

On the other hand, experts are raising concerns about new the 2016-17 wheat crop, sowing of which is under way, against the backdrop of India Meteorological Department (IMD) forecasting a warmer winter for this year.

Already, the wheat stocks in state-owned Food Corporation of India (FCI) are getting exhausted and the agency has restricted wheat sale to bulk users.

FCI is worried that if the new crop is affected due to rise in temperature and the private traders intensify their procurement, the agency will be under pressure to meet the requirement under the public distribution system (PDS).

FCI's wheat procurement remained lower at 22.9 mt even during the past year as the private traders remained active.