Centre hints at reinstating wheat import duty

Government may review the current duty free wheat import regime in view of expectations of a record harvest this year


The Centre abolished the 10% import duty on wheat in December last year after retail prices rose due to lower than estimated production in 2016. Photo: Mint
The Centre abolished the 10% import duty on wheat in December last year after retail prices rose due to lower than estimated production in 2016. Photo: Mint

New Delhi: The government may review the current duty free wheat import regime, food minister Ram Vilas Paswan said on Tuesday, in view of expectations of a record harvest this year and to ensure that imports do not dampen local prices.

The government recently removed the import duty on wheat to increase its availability in domestic market, Paswan said.

“(We) will take all necessary steps to ensure payment of minimum support price (MSP) to farmers and may review the import duty on wheat if required,” the food minister said in a statement.

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

Last year, the agriculture ministry’s wheat estimates came under scrutiny after retail prices soared due to lower availability. The ministry had estimated a crop size of 94 million tonnes in May last year (third advance estimates for 2015-16), significantly higher than the 85-88 million tonnes estimated by traders.

In its latest estimates released on 15 February, the agriculture ministry revised it down to 92.3 million tonnes, and projected the 2016-17 production at a record 96.6 million tonnes. Harvest of the 2017 crop begins in April.

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According to the food 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 this year. It has set a target to procure a record 33 million tonnes from farmers beginning April, considerably higher than the target of 28 million tonnes the year before, which fell short by nearly 5 million tonnes.

“When there is price rise the benefit is taken by the traders and consumers are exploited. However, when fresh crop hits the market prices fall and the farmers have to take the loss,” the food ministry said in its statement. “Extensive preparations have been made for procurement operations,” it added.

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