Food ministry favours slashing import duty on wheat

The Union Food Ministry has strongly favoured the slashing of duty on wheat imports to at least 15 per cent from the existing 25 per cent in order to boost domestic availability of the food grain.

"This move to bring about modest decline in import duty on wheat will be a precautionary step," a source here said on Sunday.

The Food Ministry's proposal for a modest drop in duty is now being considered by the government even as private flour millers have been demanding total withdrawal of import duty, sources said.

The Food Ministry is concerned about lower wheat purchase by state-run Food Corporation of India (FCI) this year despite projection of higher output by the Agriculture Ministry.

The move would come even as the industry is demanding withdrawal of the import duty on wheat. Officials in the Food Ministry suggest that the import duty be brought down to 15 per cent if not to 10 per cent.

Wheat stocks with FCI are declining as private flour millers are buying grains from the corporation "apprehending shortages in the market".

For its part, the corporation is keen to maintain a buffer stock for the Public Distribution System and other welfare schemes.

Traders have started looking at the import route to procure the commodity. Last year also, private flour millers purchased about 5 lakh tonnes of wheat from Australia.

The state-owned FCI at present has a wheat stock of 24.2 million tonnes, the source said.

Last year's procurement of wheat was at about 31 million tonnes. This year there is a marginal decline to 25.6 million tonnes due to low arrival, a source said.

Officials say the domestic production has suffered this year due to drought and a long dry spell in several parts of the country.

The Agriculture Ministry has maintained that due to good monsoon in 2016, after two years of drought, the country can expect record foodgrain output, including for wheat, during the 2016-17 crop year.