New Delhi: India has removed import duty on wheat flour to augment supplies, but the move will have no immediate impact on the domestic market where prices are much below world rates, traders said on Wednesday.
Wheat prices in India currently are at Rs12,000 per tonne, compared with around $469 (Rs18,479) per tonne overseas, they said.
Global wheat prices had doubled in 2007 on the back of crop failures in several producing countries. The finance ministry has abolished a 36% duty levy, a ministry notification dated 26 December, which was posted on its website, said.
“This lifting of duty on wheat flour will not hit the domestic industry because there is no price parity between domestic and international prices,” said Vinod Kapoor, former chairperson of the Wheat Products Promotion Society. “Currently, no imports of wheat or wheat products by private trade are taking place.”
The decision to scrap the duty came two days after the State Trading Corp. of India Ltd (STC) decided not to purchase costly wheat against its tender for 350,000 tonnes.
Three global bidders Cargill Inc., Glencore International AG and Toepfer International offered to sell the grain at $459-599 a tonne—prices perceived to be sky-high and driven by scarce supplies and surging US wheat futures.
In October, the Union government had banned export of wheat flour to boost domestic supplies.
India resorted to wheat imports for the second year in a row in 2007 to boost government stocks and keep a lid on prices.
Wheat futures at the Chicago Board of Trade (CBoT) settled mixed on Monday, with front months unchanged as a late round of technical selling erased an early rally.
The choppy close marked the end of a year of extremely volatile trade, during which CBoT wheat prices doubled in value as crop problems in several major world production areas and strong export demand slashed global wheat supplies.
In its first imports in six years, India bought 5.5 million tonnes (mt) of wheat in 2006 and has tied up contracts to buy 1.8mt this year to help control domestic prices and build buffer stocks it uses to run various welfare programmes.
Last week, the agriculture commissioner said India’s wheat harvest may touch 75.5mt in 2008—slightly higher than 74.9mt last year.
The country needs around 73mt annually to help feed more than one billion people