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India’s wheat production fell from 95.8 million tonnes in 2013-14 to 89 million tonnes in 2014-15. Photo: Ramesh Pathania/Mint
India’s wheat production fell from 95.8 million tonnes in 2013-14 to 89 million tonnes in 2014-15. Photo: Ramesh Pathania/Mint

Govt increases import duty on wheat to 25%

The decision was based on the continued fall in international prices of wheat and the anticipated adverse impact of increased imports during the first half of 2015-16

New Delhi: The government on Monday increased customs duty on wheat to 25% from 10% to curb imports and protect local farmers. The move comes barely two months after the it decided to reinstate import duty on wheat following a sharp increase in imports.

In August, after a gap of eight years the government imposed a 10% customs duty on wheat imports. The decision was based on the continued fall in international prices of wheat and the anticipated adverse impact of increased imports during the first half of 2015-16, the finance ministry said in a statement. Wheat prices have fallen by more than 25% in the first six months of 2015-16.

The increase in the customs duty will be applicable up to 31 March 2016.

India’s wheat production fell from 95.8 million tonnes in 2013-14 to 89 million tonnes in 2014-15. The quality of home-grown wheat is also a concern as the crop was damaged due to unseasonal showers in April and May. The freak rains affected the quality of the crop that drove imports, in turn reducing demand for domestic production.

India imported wheat amounting to $81.8 million, mainly from Australia, in the first four months of 2015-16, according to commerce ministry data. This is a sharp rise from India’s wheat import bill of $10 million in 2014-15.

Further, the import duty increase will also help liquidate government stocks. The government procured a record 28 million tonnes this year, and has a stock of 34 million tonnes (due to carry over stocks from previous years) with the Food Corporation of India.

In a separate notification, the government also exempted RBD Palm Stearin, Methanol and Sodium Methoxide used in the manufacture of specified biodiesel from central excise duty till 31 March 2016.

At present, while specified bio-diesel is exempt from central excise duty, its inputs—RBD Palm Stearin, Methanol and Sodium Methoxide—are levied central excise duty leading to CENVAT credit accumulation.

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