The Centre is mulling scrapping import duty on wheat to boost domestic supplies amid rising prices and concerns about the 2016-17 wheat crop in view of IMD’s forecast of warmer winter. The government had in September lowered wheat import duty to 10 per cent from 25 per cent till February. Private traders have imported 1.72 million tonne (MT) wheat so far and total inbound shipments are expected to cross 2 MT this year.
“The Food Ministry has proposed zero import duty on wheat in order to improve domestic availability and control prices. The PMO and Finance Ministry have started deliberating on this proposal seriously,” a source said. A decision on this is likely to be taken soon, he added.
More imports are required as the industry says that there is a shortage because of fall in domestic output in 2015-16 crop year to 86 MT even though the Agriculture Ministry maintains that it is at 93.50 MT.
The industry has demanded zero customs duty on wheat, while experts are expressing concerns about new 2016-17 wheat crop, sowing of which is underway, against the backdrop of India Meteorological Department (IMD) forecasting warmer winter this year.
Flagging these concerns, sources said the Food Ministry has proposed removal of import duty on wheat, which the PMO and Finance Ministry are “deliberating seriously”.
Already, the wheat stocks in state-run Food Corporation of India (FCI) are getting exhausted and therefore the agency has restricted wheat sale to bulk users.
FCI is worried that if new crop is affected due to rise in temperature and private traders intensify procurement, then the agency would be under pressure to meet the requirement under public distribution system (PDS).
FCI’s wheat procurement remained lower at 22.9 MT even during year as private traders were active.
Indian Council of Agricultural Research (ICAR) Director General Trilochan Mohapatra had said yesterday that the country’s wheat output could be affected if the temperature rises during crucial February-March period.