Finance minister Yashwant Sinha announced the imposition of the duty, effective today, in a statement made in Lok Sabha. The minister said with the availability of relatively cheaper import, the offtake from the central pool had been low despite liberalisation done through the open market sale scheme.

Between May and November this year, almost 15 lakh tonnes of wheat had reached Indian ports. The landed cost of wheat was much lower than the open sale rate fixed for the Food Corporation of India (FCI).

He said if the current situation continued it was estimated that there would be excess stock of over 100 lakh tonnes with FCI by April next year over the minimum buffer norm of only 40 lakh tonnes. Sinha said the carrying cost of foodgrains for FCI was heavy, estimated at around Rs 1,600 per tonne per year. Carrying the excess stock would impose a massive financial burden on the government which would be detrimental to the economy.

He said the duty was being imposed with a view to rectifying the situation and stimulating the offtake from the central pool.

The minister said a notification seeking to amend the relevant entries in the first schedule to the Customs Tariff Act, 1975, by invoking emergency powers under the act was being issued. A resolution seeking Parliament's approval to the notification shall also be moved shortly, he said. Sinha said currently under the Exim policy on foodgrains, wheat import was canalised through FCI.

However, roller flour mills were free to import wheat directly or through STC, MMTC or PEC for milling purposes. Import of wheat does not attract any customs duty at present, he said.

The minister said in view of bumper production of wheat during 1998-99 and the higher minimum support price (MSP) of wheat fixed for procurement, procurement of wheat during the current marketing season 1999-2000 had been very good.