Import duty on wheat flour lifted

Move may affect domestic roller flour milling industry in the long run.

India has lifted 36 per cent import duty on wheat flour paving the way for free import of the commodity, a government notification said. The duty free import has been made effective from December 26.

In October, India banned exports of wheat flour to boost domestic supplies. "The order will boost supplies in port cities," said an industry official.

He, however, said such a move would be detrimental to domestic roller flour milling industry in the long run because they would become dependent on imports.

Another industry official said the move was perhaps driven by the government's failure to import wheat through its latest tender floated by the State Trading Corporation.

On Dec 22, the government scrapped the 350,000 tonnes wheat import tender citing high bid prices. The state-owned company received three bids in the range of $459-579 a tonne from global trading companies""Toepfer, Cargill and Glencore.

"Failure to import wheat led the government to allow duty free wheat flour import," the officials said. India became a net wheat importer last year, after a gap of six years.

India imported 5.5 million tonnes in 2006-07 to maintain its buffer stocks. In the current financial year, India had planned to import 2.3 million tonnes. Since April, 1.8 million tonnes of wheat import had been contracted.

The country's wheat marketing year runs April-March. Analysts view the latest move as a cushion against any production shortfall in the wheat crop. Wheat, the main crop in rabi season (October-December), is harvested February onwards.

Latest official sowing updates put wheat acreage till December 28 at 24.9 million hectares, down 5.3 per cent in comparison to the year-ago period.

India's normal wheat acreage stands at 26.2 million hectares. The country's wheat production target has been fixed at 75.5 million tonnes for 2007-08.

The climatic conditions in December-January, during the grain filling stage, would be crucial for the final output, said a farm expert.