Centre reinstates 10% duty on wheat, pulse imports

The import duties are a response to an anticipated record harvest after a normal monsoon in 2016, which followed consecutive years of drought


India, the world’s second-biggest wheat producer, lowered the import tax wheat to 10% from 25% last Sept and scrapped the duty on 8 Dec. Photo: Priyanka Parashar/Mint
India, the world’s second-biggest wheat producer, lowered the import tax wheat to 10% from 25% last Sept and scrapped the duty on 8 Dec. Photo: Priyanka Parashar/Mint

New Delhi: To protect farmers from a price dip ahead of a record spring harvest, the government on Tuesday imposed a 10% import duty on wheat. It also imposed a 10% duty on import of pigeon pea (arhar) after farmers were forced to sell at lower than government-announced support prices on the back of a bumper crop.

While the wheat duty comes just in time for the harvest and may prevent wholesale prices from dipping below minimum support prices (MSP) at which the government procures from farmers, the duty on arhar is more likely to benefit traders as farmers have already sold the crop beginning December last year.

“We welcome the move to reinstate the import duty on wheat, but the decision on arhar has come late and farmers may face a similar situation for chana (another major spring harvest) selling at less than MSP,” said Ajay Vir Jakhar, chairman of Bharat Krishak Samaj, a farm advocacy body.

The import duties are a response to an anticipated record harvest after a normal monsoon in 2016, which followed consecutive years of drought.

The agriculture ministry has estimated a record 96.6 million tonnes of wheat harvest in 2016-17, higher than the 92.3 million tonnes estimated for the previous year.

In December last year, the government abolished a 10% import duty on wheat after retail prices rose due to lower than estimated production in 2016. In September, it had slashed import duty to 10% from 25%.

According to the ministry, following the production shortfall last year, wheat imports to India surged to a high of 5.5 million tonnes (2016-17).

However, the ministry expects a turnaround in 2017 and has set a target to procure a record 33 million tonnes from farmers beginning April. This is considerably higher than the procurement target of 28 million tonnes set the year before, which eventually fell short by nearly 5 million tonnes.

As in the case of wheat, the agriculture ministry has also estimated arhar production at a record high. Indian farmers likely harvested 4.2 million tonnes of arhar in 2016-17, up from 2.6 million tonnes produced the year before.

However, in most wholesale markets across states like Karnataka, Maharashtra, Madhya Pradesh and Rajasthan farmers sold arhar between Rs4,000 and Rs4,600 per quintal, lower than the MSP of Rs5,050 per quintal.

“In the present scenario where tur (arhar) is trading below MSP, the decision by the government seems to be a well-thought-out move,” said Pravin Dongre, chairman of India Pulses and Grains Association. He added that lifting of the ban on export of pulses and lifting of stock limits on traders are also important steps that the government could take to help farmers.

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