India: Centre mulls zero-duty wheat import plan to check rising prices, boost dwindling stocks

A plan to import wheat at zero duty after a gap of six years is in the works to check rising prices and boost dwindling stocks of the grain.

A bunch of riders will be tagged to avoid allegations of favouritism towards importing country farmers, sources said. Wheat duty is 40 per cent at present.

The government could allow shipments at designated ports and impose a price cap to limit forex outgo.

Officials said several other options are under consideration, and a call taken by the new government after the Lok Sabha polls.

Sources said the imports would make up the supply deficit and shipments may begin in September. The imports must also meet phytosanitary conditions, and the port should have the requisite facilities.

According to the United States Department of Agriculture’s (USDA) foreign agricultural service (FAS) division, India may import around 2 million tonnes (mt) of wheat in 2024–2025.

The FAS attributes this potential increase to several factors, including steady domestic demand and a decline in stocks.

It said an import duty cut is likely in the second half of 2024–2025.

Food ministry officials said the government is keeping a close watch on the market price of wheat. “Compared to last year, we are in a better position and all options for the market intervention programme are open,” a ministry official said.

The purchase of wheat by government agencies in the current rabi marketing season — 2024-25 (April-June) — has crossed 26.46mt on Tuesday, which is marginally higher than the total purchase of 26.19mt in the 2023-24 season.

Officials said the total grain purchase is likely to be around 27mt, which is adequate to meet the requirements under the Pradhan Mantri Garib Kalyan Anna Yojana and maintain a buffer.

The food ministry had projected 30-31mt of purchases in the current season.

“We need around 18.4mt of grain for social welfare schemes, and any additional procurement in the current season would help us in carrying out open market sales to curb a possible spike in prices,” Ashok Meena, chairman and managing director of FCI, had stated.

The wheat stock in the central pool on April 1, 2024 has been at the lowest level since 2008 at 7.5mt.

In the last fiscal, the government had offered to sell 10mt in the open market to check prices.

In the case of lower procurement, the government will not be in a position to sell such a large quantity.

After achieving a record procurement of 43.3mt in the 2021-22 season, the purchase by the government agencies fell to a record low of 18.8mt in the 2022-23 season. However, it rose around 40 per cent to 26.2mt in 2023-24.

Retail inflation in wheat rose to 6.02 per cent in April while the price rise was 4.74 per cent in March.

Retail prices of wheat as per the department of consumer affairs data is currently ruling at ₹28/kg, which has remained unchanged for the last several months.

The agriculture ministry has projected wheat production in the 2023-24 crop year (July-June) at 112mt while a private survey had estimated the output at 106mt

Tags: stocks, shipments, procurement, Market, demand, импорт, grain, prices, wheat, India, duty