Wheat import duty rollback to ease availability, lower prices

Benefit of lower duty will not be fully passed on to millers, as importers had earlier made losses due to higher purchase price

The partial rollback of import duty on wheat from 25 per cent to 10 per cent announced on Friday by the Government of India would ease the availability of the grain to millers in most parts of India. A price correction is also anticipated and is likely to be more conspicuous in states closer to ports than central and northern India.

Taking the lower duty into account, the landed cost in India of superior quality Australian prime wheat may come down to Rs 1,900-1,950 from the prevailing Rs 2,080-2,100 per quintal. Red wheat, imported from Ukraine, is expected to be priced at Rs 1,650 a quintal, down from Rs 1,800, said a trader, who did not wish to be named.

Sources close to the development indicated that the benefit of reduction in duty will not be fully passed on to millers from importers as they had earlier incurred losses on account to purchase at a higher price in the international market.

“The lower price of wheat will curb the speculation in wheat price and even if the prices would not decrease drastically, the availability will streamline”, told Adi Narayan Gupta, a senior member of Roller Flour Millers Association of India.

He said that the price in the north was Rs 1,800 a quintal and a Rs 20-Rs 25 per quintal fall is expected post duty reduction. The assured availability of wheat during festival season will help to run the smooth operations and this will benefit them, he added.

Sources in the trade said 600,000-650,000 tonne of wheat has landed during this season so far as compared to total annual import of 450,000 tonnes last year.

Contracts of 3000,000-350,000 tonnes have already been in booked and waiting for the arrival. Another 500,000-600,000 tonnes would be imported as the duty has been reduced.

Till now, Tuticoran port was the most preferred destination for wheat import as the highest demand for wheat in Kerala and Karnataka but lower import duty may make it viable for the importers to get consignments in ports in Gujarat also.

Wheat price in international market has softened from $240-$255 per tonne to $220-230 for Australian Prime Wheat and $205-$215 to $188-190 per tonne for Ukraine wheat.

Pramod Kumar, a Bangalore-based miller told that this will make southern mills more competitive and help them with better capacity utilisation.