June 6, 2006

India to relax rules for new wheat tender

India would relax rules for its new wheat tender as strict rules in its first tender put off many potential bidders, Food Minister Akhilesh Pratap Singh said on Monday (Jun 6).

India sought 3 million tonnes in its last tender but only managed to buy 800,000 tonnes.

The new tender should be announced in the next one or two weeks, Singh said, adding that the size of the tender had not yet been decided.

Bidders said stringent requirements, such as fumigation with a chemical banned in some countries and terms that would see payment made after delivery killed interest in the tender.

Traders say relaxing the rules could help attract suppliers from those in the US and Canada.

A government official said on Friday (Jun 3) that India had finalised contracts for the purchase of 800,000 tonnes of wheat from two firms, including Australian exporter AWB Ltd.

AWB, which had won an earlier tender to supply 500,000 tonnes of wheat in March, has so far sent only a fifth of that quantity. The remaining amount has been turned away due to quality issues.

Traders say the shortfall will boost wheat prices for at least two to three months.

The government has estimated that wheat procurement was likely to fall by more than a third to 9.5 million tonnes, from last year's 14.7 million tonnes.