A panel of secretaries may soon consider a proposal to double the import duty on wheat from current 20% to rule out any possibility of cheaper import coming into the country as the harvesting of the crop has started.
The secretaries of food, agriculture and commerce ministries are expected to discuss customs duty-related issues on agriculture commodities with finance minister Arun Jaitley on February 15, sources said. In the last meeting of the inter-ministerial panel, a secretary had suggested import duty on wheat be raised to 40%, but a decision was postponed since sowing was not complete and the estimate on production is yet to be released, sources said.
However, since the wheat sowing has been completed, the government may have a forecast on the likely production based on the average yield and the current condition of the crops, sources added.
India imported 5.75 million tonne of wheat in FY16-17, as against 518,000 tonne in 2015-16. This year, the wheat import was 1.15 million tonne during April-October, official data show.
After paying 20% duty, the wheat from Black Sea region is available at about `18,500/tonne, which is lower compared to locally grown (from Madhya Pradesh) grain at `Rs 20,200/tonne in Bengaluru. However, since flour millers prefer Australian wheat due to quality, they are not buying the grain of Ukraine. The Australian wheat costs around Rs 20,900/tonne.
After the Madhya Pradesh government announced the bonus of `200/quintal, millers expect local wheat prices to go up from the previous Bengaluru price level of around `20,200/tonne. If it becomes economically viable, some import contracts may take place in next 15 days, traders said.
“However, it all depends on the import duty and how the market reacts to the bonus,” a miller said.
The sowing area of wheat has declined 4.3% to 30.43 million hectare in the current rabi season as against 31.78 million hectare in the 2016-17 crop year (July-June).
According to official data, wheat acreage has fallen because of less area coverage in Madhya Pradesh, Uttar Pradesh and Maharashtra. Maximum drop in wheat acreage by 1.1 million hectare has been reported in Madhya Pradesh. Taking into account an average yield of 3.1 tonne per hectare, total production of wheat is seen at about 95 million tonne. The agriculture ministry had set a target of 97.50 million tonne output this year before sowing started.
By Prabhudatta Mishra