Centre to revisit duty free wheat import by pvt cos

NEW DELHI: Under intense pressure from the private sector and overall shortfall in supply in various parts of the country, the Union Cabinet is set to reconsider its earlier decision on duty free import of wheat by private trade. Currently, private sector wheat importers are allowed to import wheat at 5% as compared to 0% for the STC, which issued global tenders for about 35 lakh tonnes since February this year.

Wheat imports by the private sector, primarily flour mills and biscuit manufacturers, was jeopardised by the persistent refusal of the government to bring the import duty on par with STC. Private sector improts were expected to make up the two million tonne shortfall in rabi ‘05-06 production.

Earlier this month, the Cabinet Committee on Prices (CCP) ruled out the possibility of scrapping the duty for the private sector in order to supplement imports by STC through global tenders.

As a result, private sector importers found that the margins on wheat at the 5% duty were ‘razor thin’ compared to ruling domestic prices, which work out to around Rs 10,200 per tonne. This was inclusive of transport from northern states such as MP from where wheat is being procured for markets with a noticeable shortfall.

“For import rates on wheat to be competitive at present, given the firming up of wheat prices in the international market, the government has at least to allow zero duty imports, same as with the STC,” trade analysts said.

According to the FCI, the import prices worked out same as domestic wheat prices, except for additional incidental expenses like storage, transport which inflate price of domestic wheat.