May 22, 2006

India rules out duty-free private wheat imports

The Indian government said it would not allow duty-free wheat import by private traders to increase supplies despite a tighter wheat supply situation this year that required the country to issue a tender for 3 million tonnes of wheat.

Official sources said the government might consider concessions to the user industries, but not duty free import.

Private traders such as flour millers and wheat user industries incur a 50 percent duty when they import wheat and have been demanding an end to tariffs due to the tightening wheat import situation.

A supply shortage could occur in next three to four months, a trader warned and would come to a head during the festive season in September.

India has not yet reached its goal of a 3 million-tonne shipment due to strict pesticide requirements which ruled out many potential wheat providers.

India is facing a wheat shortage as domestic wheat production has fallen due to weather fluctuations this year.

Observers say India may need another two million tonnes to meet the supply shortfall in the open market.