The government has decided to extend the 25% import duty on wheat for another three months, mainly due to sufficient domestic stock available in the country. A notification by the Central Board of Excise and Customs is expected shortly.
In March this year, the government had extended the 25% import tax on wheat till June 30 essentially to curb imports as domestic output is estimated to rise by more than 8% to 94.04 million tonne (MT) in 2015-16 from 86.53 MT reported in the previous year, despite deficient monsoon.
However, trade sources have said that wheat output is less than what is being estimated. Meanwhile, the wheat procurement by Food Corporation of India (FCI) and state government-owned agencies in the ongoing rabi marketing season (2016-17) has sharply fallen by 22% to around 23 MT so far against 28 MT achieved last year.
Sources told FE that the government has extended the wheat import duty as it has surplus grain stock with the FCI. Sources said that at present imported wheat from Australia costs around R2,200 to R2,300 per quintal (inclusive all the duties and expenses) which is at similar level of the ‘economic cost’ of wheat held with FCI at R2,345 per quintal.
“There is sufficient domestic availability of wheat to cater to the demand ,” an official said. On May 19, against the buffer stock norm of 24.5 MT for July 1, FCI had wheat stock of 31.4 MT. Besides, the corporation has to have 3 MT of wheat as strategic reserve. In an inter ministerial meeting chaired by Hem Pande, secretary, Department of Consumer Affairs recently, an FCI official said that the corporation has sufficient stocks of wheat to cater to requirements of Public Distribution System (PDS) and buffer norms.