Customs duty slash may pull down price of wheat

Wheat prices could see a downward movement on the back of improved market sentiment, following the government's decision to allow the private sector to import wheat at a low Customs duty rate of 5 per cent, a leading industry body has said.

The decision would also bring down prices in the futures market, Roller Flour Millers' Federation President Prem Gupta said.

"The decision to allow biscuit and bread manufacturers and flour millers will help bring down the wheat price level," he said.

Gupta said the decision of NCDEX to bring down the maximum margin limit for wheat futures by .5 per cent would also improve market sentiment.

The state trading corporation (STC) has awarded contracts for 22-lakh tonne wheat imports to five global trading companies and supplies are expected in the next two-to-three months, Gupta said, adding that "This would also remove psychological pressure about artificial shortages."

He, however, said the market sentiment would have been much better had the government allowed duty-free wheat import. The 5-per cent duty on wheat import would mean there would have been a difference of Rs 45 per quintal had the wheat imports been allowed duty free, a trader said.

The government should have permitted duty-free wheat import, said DP Singh, chairman of the All India Grain Exporters Association.

"The 5-per cent duty on wheat import would not have the same kind of impact on the price as duty-free import would have had on market price level," he said.