The basic customs duty, which was raised to 25 per cent from 10 per cent last October, will be applicable till June 30, according to a Finance Ministry notification.
Earlier this month, Agriculture Minister Radha Mohan Singh had indicated that the Centre may not allow the import duty on wheat to lapse when he rejected a study done by industry body Assocham that estimated crop damage of 13 million tonnes (mt) due to the unseasonal rains and accused it of trying to compel the government to lower duties.
Singh argued that while the freak weather had done some damage to the wheat crop, production would still be higher by seven per cent at around 92-93 mt.
Reduction in import duties on wheat would lead to lowering of domestic wheat prices that would add to farmer distress. Farmers in the country, specifically in several districts of Maharashtra and Tamil Nadu, have been hit by severe drought and are suffering huge crop losses.
Bloomberg adds: It will not make any sense to import wheat at this duty, said P Gunasekaran, President of the Tamil Nadu Roller Flour Mills Association. “We will have to manage with local wheat for the next three months before planning our imports. As such the quality of Indian wheat is good this year.”
Australian wheat
The landed cost of Australian wheat in Tamil Nadu will be ₹21.50 a kg($323 a tonne) compared with about ₹19.50 for good quality wheat from north India, said Gunasekaran.
Overseas purchases are seen at 500,000 tonnes in the year ending March, compared with 52,000 tonnes a year earlier, according to the US Department of Agriculture.
Lower import duty on wheat would lead to a fall in wheat prices in the domestic market and farmers will incur heavy loss while traders will purchase from farmers at lowered price, Agriculture Minister Singh said on March 19.
The import duty will help growers get better prices during the harvest and is in line with Prime Minister Narendra Modi’s target to double farmers’ income in five years, Gunasekaran said.
Wheat futures in Mumbai have fallen 6.6 per cent this year, compared with 0.3 per cent gain in prices on the Chicago Board of Trade.
Source : Business Line