October 16, 2003

 

 

South India's Flour Millers Requested Zero Duty on Wheat Imports

 

The Confederation of Flour Mills of Southern India has urged the Union Government to allow the millers to import wheat at zero duty to tide over the crisis situation arising out of virtual depletion of the grains supply to them. Though wheat is imported under the Open General Licence, a duty of 50% would affect the economics of the industry.

 

Millers have been facing acute shortage of wheat for the 9 months. The fear of steep increase in the price of open market wheat, on which they have to depend in the absence of any supply from Food Corporation of India, is constantly bothering them. With the current drought situation, FCI stocks have been earmarked for relief and the Public Distribution System (PDS). Besides, the Government has also decided to discourage fresh exports in view of the depleting stocks at FCI and the need to meet the supplies to the States in the last few months.

 

Mr M.K. Dattaraj, former President of the Karnataka Roller Flour Millers Association, told Business Line that the Government could make an exception like in 1996-97 when it liberalised import at 0% customs duty due to poor harvest. Though this time the situation was different in that the ad hoc policy of allowing exports to liquidate the 'huge amount' of more than 60 million tonnes until last year and the sudden pressure on the stock for drought relief had deprived the millers of their allotted supply from the Open Market Sales scheme of FCI. Besides, the diversion of freight rakes for transport of wheat to the States for the welfare measure also put a squeeze on the supply to the millers.

 

In view of the 'developing situation' the Confederation has decided to present a memorandum to the Agriculture Minister in Delhi this week. A delegation would meet the Central Government officials and the Minister later this week, said Mr V.K. Bansal, another former President of the Karnataka Association. He said Mr Ashok Kumar Gupta would lead the Karnataka delegation, while Mr M.V. Balasubramaniam and Mr Vinod Gupta would represent Tamil Nadu and Andhra Pradesh respectively.

 

Mr Datta Raj said with the shortage assuming alarming proportion the open market price of wheat was rising and will cost the millers above FCI price of about Rs 8,600 per ton. He said the price of imported wheat would be cheaper at Rs 7,300 per ton at zero customs duty as compared to the price of wheat sourced from the open market in Delhi. It would be Rs 10,385 per ton, he said.

 

With the supply of wheat produced in India still 4-5 months away for the non-what growing southern states, it's likely that the industry would have to depend on cheaper alternative source of imports to keep the mills running.
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