MP might lower mandi tax to facilitate wheat exports from the state

Exporters want de-clogging of ports to further push shipment

Madhya Pradesh government might consider slashing the mandi tax on wheat bought for exports from the state to further push up purchases, as both Centre and states look to capitalize on the favourable global market conditions for Indian wheat.

Sources said a proposal towards this effect was made at a high level meeting that the Union Food and Commerce Minister Piyush Goyal and Madhya Pradesh Chief Minister Shivraj Singh Chouhan had with leading grain and cereals exporters from the country and top government officials today.

Chairman of all major ports from across the country along with Chairman of Railway Board were also invited to participate in the meeting called to explore ways and means to further promote wheat exports from India.

The Madhya Pradesh government is also believed to have suggested formulating a single license to purchase wheat from any mandi across the state instead of the current practice of having to secure separate licenses.

Presently, Madhya Pradesh imposes a nominal mandi tax of 1.5-2.0 per cent which is among the lowest in the country and even if this is waived off for exporters it will give further fillip to shipments.

Madhya Pradesh has been one of the main states from where wheat could be exported out of India this year due to high quality of produce, proximity to major ports in the western coast of the country and also low taxes.  

Trade sources said the state is also keen to ensure that maximum private purchases take place from Madhya Pradesh in the 2022-23 procurement season as it is sitting on a huge stockpile of carryover wheat from previous years.

“So unless the procurement is less this time, the stocks in hand could become unmanageable,” a trader from a leading firm said. It is next only to Punjab in official procurement of wheat at MSP.

Madhya Pradesh, has targeted to procure around 12.8 million tonnes of wheat in FY-23, but officials said actual purchases could be much less due to heightened private buying.

Of the total record over 7 million tonnes of wheat exported from India in Fy-22, around 30-50 per cent will be from UP, MP, Gujarat and Rajasthan (largely from the Kota belt), trade sources said.

IN Fy-23, wheat exports from India could reach a fresh milestone of almost 10 million tonnes if the current Russia-Ukraine Crisis lingers on and needless curbs on outbound shipments aren’t imposed.

Prices of Indian Indian wheat prices in the world markets had shot up to around $360 per tonne (FOB) a few days back in the aftermath of the crisis cooling down a bit to around $330-$340 per tonne (FOB) in the last few days.

The current price of Indian wheat is still the cheapest among all global competitors and the absence of Ukraine and Russia from the world markets for the next few months will give Indian traders a golden chance to ship record quantities.

PORT CONGESTION

Meanwhile, sources said major wheat exporters from India in the meeting today suggested the government provide more railway rakes to clear the shipments fast and also de-clog the ports so that ships carrying Indian wheat can leave the shores quickly.

“Port congestion is a major issue as all big ports in the West Coast of the country be it Mundra, Pipavav or Dahej are all clogged with imported urea which has not been lifted for months now. This should be cleared at the earliest because unless buyers get their cargo on time in this hour of crisis our credibility will suffer,” a trader from a leading global cereal exporting firm said. EoM