India imposes import duty on wheat, tur dal

Import duty on wheat will help farmers get better price; it was abolished in December 2016

Days before the Centre begins its annual wheat procurement in full steam, it re-imposed an import duty of 10 per cent on the commodity and levied duty of a similar duty on tur (pigeon peas).

The estimated revenue implication of both measures is Rs 840 crore at current levels of import. The import duty on tur has been imposed after a long gap.

Announcing the decision in the Lok Sabha, Minister of State for Finance Arjun Ram Meghwal said a notification from March 17, 2012, had been amended so as to “impose basic customs duty of 10 per cent on wheat and tur with immediate effect”. The import duty on wheat was withdrawn in December after wheat and flour prices started rising in the open market because of a supply crunch. The withdrawal allowed traders to import almost 6 million tonnes of wheat, among the highest in recent times, to restock inventories.

Inventories with food companies were running thin because of a weak output in 2015-16 and low sale of government stock.

Most of the imported wheat came from France, Ukraine and Australia. Officials said large imports and forecasts of a bumper crop prompted the government to impose the tax so that wheat farmers’ interests were protected. The new wheat crop has started arriving in mandis of Madhya Pradesh, Rajasthan and Gujarat. “Wheat prices in north India are at Rs 1,625 a quintal and transportation to the south will cost another Rs 200. With a 10 per cent levy, imports will not be viable,” said Veena Sharma, secretary, Roller Flour Millers Federation.

Tur prices crashed in the open market following a bumper harvest of 4.23 million tonnes in 2016-17. Much of the crop has been purchased by state agencies and traders.

Traders welcomed the move on the grounds that a further fall in prices would have discouraged farmers from planting tur in the next kharif season. “This levy will encourage farmers to bring in additional area,” said Bimal Kothari, vice-chairman, India Pulses and Grains Association (IPGA).

India imports around 0.5 million tonnes of tur every year, primarily from Myanmar. The price of tur dal in Mumbai has declined 18 per cent from Rs 73 a kg in early January to Rs 60 a kg now. The Centre had planned to purchase 33 million tonnes of wheat from farmers in the 2017-18 marketing season that will start on April 1, almost 1 million tonnes more than the actual procurement of 2016-17.

The government estimates wheat production at a record 96.64 million tonnes in 2016-17 against 92.29 million tonnes in 2015-16. Tur dal production is estimated at 4.23 million tonnes against 2.56 million tonnes a year ago.