Govt plans deferred incentive scheme for wheat imports

NEW DELHI: After successfully using advance licences for tiding over sugar shortage, the government believes an incentive scheme may work for wheat as well. The government is examining a plan to give sops next year to traders who import wheat this year. The move is aimed at ensuring there is no shortage between August and December next year. Bringing the import duty on wheat to zero is already on the cards.

The food ministry has also asked all the large private traders of wheat, including multinationals, to give details of how much wheat they are individually holding right now. The move was necessary because the government has been toying with the idea of imposing stock limits on traders. A stock limit would force all companies to sell the quantities in excess of the ceiling into the open market. That would cool down prices.

Industry officials, however, say that none of the companies are holding extraordinarily high wheat stocks. So a ceiling on stocks may have a lukewarm effect on the physical availability of wheat.

According to food ministry officials, next year may be equally difficult for wheat. Consequently, it may be necessary to create a mechanism that encourages private companies to undertake wheat imports once the harvest is in.

However, the nature of incentives is still being debated. Wheat imports are on OGL, with a 5.2% customs duty on it. If the duty is also cut to 0%, as the food ministry has already proposed, that may leave little room for more incentives.

Wheat imports are picking up pace in the South. Awb of Australia alone is learnt to have sold 2 lakh t wheat to local millers there.

Meanwhile, farmers are disinvesting from wheat. Lorries containing wheat sacks are arriving at mandis in Delhi, UP, Punjab, Bihar, Rajasthan and Gujarat. Quantities are also arriving in Andhra Pradesh and Karnataka mandis. Farmers traditionally do a second round of wheat sales just before Dussehra to clear their godowns for the incoming paddy harvest. Last year, it was this second round of sales which allowed the Centre to keep a lid on wheat prices without resorting to imports.

Though the volumes of individual mandis is rarely crossing 100 tonnes per day, it is enough to exert a bearish pressure on the physical market in the short term. Most of the wheat is being bought at between Rs 8.50 and 10 per kg. The better quality Lokvan wheat is getting a premium.