Wheat, edible oil import duties could be cut

Import duty on crude edible oil may be brought down to 7.5%, on refined to 15%

The central government is likely to lower the import duty on wheat to 10 per cent from the current 25 per cent and that on crude edible oil to 7.5 per cent from the existing 12 per cent.

The import duty on refined edible oils could also be brought down to 15 per cent, from the existing 20 per cent.

These are meant to improve their supply, particularly during the festival months of October to December. Officials said a formal announcement would be after the proposals are cleared by the Union Cabinet.

The issue of price increase in wheat and edible oils was discussed recently by top officials. Wheat prices in retail markets of many cities rose by Rs 1-2 a kg in the past two months, while wheat flour rates have moved up by Rs 2-3 a kg.

The Centre in June had extended the 25 per cent import duty on wheat for an unspecified period. Traders and mill owners said a sharp drop in availability due to less production and tight market conditions was pushing up the price.

Private traders have already imported about 600,000 tonnes of wheat; more is expected if the duty is lowered. Commodity expert Tejinder Narang told Reuters news agency last week he expected private wheat imports to be four to six million tonnes, as the domestic crop is lower than earlier estimated.

In a sign of tightening supplies, the government had last month lowered the quantity of wheat that private flour millers could buy through open market sale to 500 tonnes, from the earlier 5,000 tonnes. This was then made 2,000 tonnes, after millers protested.

In the case of edible oils, officials said the retail price of many had shown a rising trend in recent months, due to a surge in global markets and some concern on the kharif soya bean crop.

A Bloomberg report had said crude palm oil's November delivery contracts had surged 9.1 per cent in August and could rise further by year-end. Its landed price in Mumbai between August 2 to September 2 had risen by 45-52 per cent, and of the refined variety by 37-40 per cent. Imported soy oil rates have moved up by 16 per cent in this period.

In the home market, packaged soyoil rates have moved up by Rs 5-7 a kg in the past two months; packaged groundnut oil has become costlier by Rs 5-10 a kg. Packaged palm oil and mustard oil is dearer by Rs 5-15 a kg during this period in most cities. LIKELY RATES

• Wheat: Centre likely to lower import duty to 10% from current 25%
• Crude edible oil:  Import duty may be lowered to 7.5 per cent from existing 12 per cent
• Refined edible oils: Import duty could be brought down to 15%, from the existing 20%