March 5, 2007

 

Curtains down on India's duty-free wheat import regime

 

 

India's eight-month old concessional import duty regime for wheat import by private companies has ended at least for the time being, even as uncertainty looms over if and when it will be revived.

 

The zero import duty regime on wheat was only till Feb 28, and since no new notification has been issued for an extension, it has lapsed.

 

Until the government restores the concession, the import duty on wheat is now 50 percent.

 

"There has been no decision to extend or not to extend the duty free import of wheat as of now," India's Food Secretary T. Nanda Kumar said on Friday (Mar 2).

 

Kumar declined to comment on whether the government plans to restore the concession anytime soon but said if at any point it is felt that the concession should be revived, it can be done through another official order.

 

"The government's decision not to continue with duty-free wheat imports reflects its confidence that the new harvest is going to be good," said Atul Chaturvedi, President-Agro, Adani Exports, an Ahmedabad-based trading firm in the western province of Gujarat.

 

Wheat is already being harvested in Gujarat and adjoining province of Maharashtra.

 

"Rains this week have been excellent, they will definitely benefit the crop if daytime temperature between Mar 15 and Mar 30 is between 30 degrees and 33 degrees," said S.S. Singh, Principal Scientist at the Indian Agricultural Research Institute, the country's premier institute on farm research.

 

Importing wheat at current prices not viable

 

As the local harvest has begun and prices are on the decline, it is comparatively costlier to import wheat at the moment, traders said.

 

"It doesn't make sense to import wheat when domestic crop is round the corner," said Anil Monga, Managing Director, Emmsons International, a New Delhi-based trading firm.

 

He said the government has already given two months of additional time for duty-free imports of wheat beyond the originally stipulated Dec 31 deadline.

 

The government's Annual Economic Survey for 2006/07 has estimated total wheat imports by private companies at 1 million tonnes during the current financial year ending Mar 31.

 

Imports mainly began when government reduced the import duty on wheat to 5percent on Jun 28 and got a further boost when the duty was cut to zero Sep 9.

 

Private companies mostly imported wheat from Australia, Russia and countries around the Black Sea.

 

Imports ensured the government didn't have to make any sales to flour mills from its own stocks between October and February when local supply was tight.