Govt allows private trade to import wheat duty-free

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The government on Monday allowed duty-free wheat imports by private trade to stem rising prices and augment market supplies, reports Reuters.

"As of today there is no duty on imports of wheat," Farm Minister Sharad Pawar told reporters on the sidelines of a fisheries department meeting."This facility will be available for the next 4-5 months, may be until December or January. This decision has been taken already and the orders will be issued shortly," he said.

India, with the world's largest population after China, needs to maintain a buffer stock to ensure adequate supplies for the poor and to keep market prices in check. Following a poor crop India began buying wheat in March, for the first time in six years, to augment stocks with state-run Food Corp. of India that handles the public distribution system.

According to the Food Ministry, India's wheat stocks were estimated at 7.33 million tonnes on August 1, down from 12.9 million tonnes a year ago.In June, the government cut the import duty on wheat to 5% from 50% to boost supplies in the local market.

Since then private traders have contracted imports of about 500,000 to 600,000 tonnes, but many firms had been demanding the duties be scrapped altogether to boost supplies even more. Until now, only government-run agencies were allowed duty-free wheat imports.

State-run State Trading Corporation has contracted imports of 3.8 million tonnes of wheat since March. Last week, it floated a fresh tender for 1.67 million tonnes. Pawar said it was unlikely the government would have to import more wheat.

"Now we are encouraging private sector imports. So I don't think any more will be necessary, but we are open and if required, we will import," he said.Pawar said the measures taken should help to overcome the shortage and bring down prices.Wheat prices have risen more than 30% to about Rs 1,050 (USD 22.6) per 100 kg from Rs 800  in the last six months.India's wheat crop is sowed in October and harvested in March.

The output in the last crop was about 69.48 million tonnes, according to farm ministry estimates, against a target of 75.5 million tonnes.State agencies have procured just 9.2 million tonnes of wheat in the current marketing year, against an earlier target of 16.2 million, leading to depletion of stocks.

However, good rains have raised expectations of the coming crop."This year, overall monsoon will be helpful for agriculture," Pawar said."The second spell of rains has substantially improved the situation. It will be helpful for the summer harvested crop," he added.

Wheat and rapeseed are among key summer harvested crops.The Farm Minister said the government was trying to boost the acreage of wheat in the eastern states of Bihar and West Bengal and western states of Gujarat and Maharashtra, where the crop is traditionally not grown. Punjab, Haryana and Uttar Pradesh are the key growing regions for wheat.