Govt extends wheat import duty by 3 months

The move comes amid forecasts for a rebound in Indian crop from a five-year low and should prevent distressed sales by farmers during the harvest

The government has extended a duty on wheat imports by three months to protect farmers from cheap overseas supplies.

The 25 per cent duty will stay until June 30, the finance ministry said in a notification on March 28. The government first imposed a 10 per cent duty on imports in August and increased it to 25 per cent in October through March, citing a decline in global prices and its adverse impact on domestic growers.

The tariff extension comes amid forecasts for a rebound in the Indian crop from a five-year low and should prevent distressed sales by farmers during the harvest. Output will total 92 million tonnes to 93 million tonnes in 2015-16 after untimely rain and hail recently caused some damage to the crop, Agriculture Minister Radha Mohan Singh said March 19. The ministry earlier estimated the crop at 93.8 million tonnes compared with 86.5 million tonnes a year earlier."It will not make any sense to import wheat at this duty," said P Gunasekaran, president of the Tamil Nadu Roller Flour Mills Association. "We will have to manage with local wheat for the next three months before planning our imports. As such the quality of Indian wheat is good this year."

Australian wheat

The landed cost of Australian wheat in southern state of Tamil Nadu will be Rs 21.50 a kg ($323 a tonne) compared with about Rs 19.50 for good quality wheat from north India, said Gunasekaran. Overseas purchases are seen at 500,000 tonnes in the year ending March, compared with 52,000 tonnes a year earlier, according to the US Department of Agriculture.

"Lower import duty on wheat would lead to a fall in wheat prices in the domestic market and farmers will incur heavy loss while traders will purchase from farmers at lowered price," Agriculture Minister Singh said on March 19.

The import duty will help growers get better prices during the harvest and is in line with Prime Minister Narendra Modi's target to double farmers' income in five years, Gunasekaran said.

Wheat futures in Mumbai have fallen 6.6 per cent this year, compared with 0.3 per cent gain in prices on the Chicago Board of Trade.