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After a gap of eight years, the Centre on Friday imposed an import duty of 10 per cent on wheat to curb foreign purchase by private traders and boost domestic prices. The duty will be valid till March 31, 2016.
“The estimated revenue implication of the above exemption is revenue gain of about Rs 90 crore in the remaining part of the year,” a statement by finance minister Arun Jaitley said.
The duty was imposed after private traders, flour millers, and other bulk consumers of wheat placed orders for import of around 500,000 tonnes because of poor quality of domestic crop. Another 200,000-300,000 tonnes were expected to land on the Indian shores in the next few months, which might not happen now because of the duty, officials said. In the international market is around $20 per tonne cheaper than the domestic market, which is also the reason why private traders bought huge quantities .
India is expected to produced 91 million tonnes in 2014-15, almost five million tonnes less than last year, due to widespread damage to the standing crop in the northern states of Punjab, Haryana and Uttar Pradesh during the rains and hailstorm that occurred around March this year. In areas where there was no full-scale damage, the crop quality was impacted, compelling private traders to purchase from foreign markets.
According to officials, of the 28 million tonnes of wheat purchased by the Food Corporation of India and state agencies, 90 per cent is of average quality but fit for human consumption. The quality norms were lowered because of the damage.
Reuters quoted an unnamed trader saying that the government might have been forced to move quickly owing to fears that some of the 52,500 tonnes of French wheat rejected by Bangladesh over quality concerns could find its way into India.
The trader, who did not want to be named, said at least one of the rejected cargoes was headed towards Tuticorin port in southern India. "The government did not want any rejected cargo to come to India because it would have prompted trading companies to divert the rest of their rejected vessels to Indian shores."
