Govt likely to cut import duty if needed to cool down wheat prices

By Sanjeeb Mukherjee

The government will not hesitate about using all the options, including reducing import duties, to bring down retail wheat prices, Food Corporation of India Chairman Ashok Meena said on Friday.

He said the FCI had a stock of 8.7 million tonnes (mt) of wheat and 29.2 mt of rice after meeting all the requirements of the public distribution system and other schemes to intervene in the market as and when required to cool down retail prices.

The maximum intervention that the FCI has undertaken through open market sales in the past few years hasn’t been more than 7 mt in a fiscal year.

“We intend to monitor the retail price of wheat and rice closely and are also opening the portal for disclosure of cereal stocks held by traders. Open market sale will continue till the retail price of wheat and rice are not brought under control,” Meena said.

India currently imposes around 40 per cent import duty on wheat.

Last week, it imposed a stock holding limit on the commodity and decided to liquidate 1.5 mt of wheat from its inventory to cool down the prices.

The measures, however, haven’t had a big impact so far as prices have remained high.

Detailing the process through which the wheat will be liquidated for small processors and traders, Meena said those who had goods and services tax (GST) numbers would only be eligible to participate in the e-auction starting Saturday.

This will ensure that buyers from outside a state don’t participate in the e-auction and retail price in that region comes down.

In the first e-auction, around 400,000 tonnes of wheat is being offered from 457 depots and all the 2,093 empaneled buyers can take part in the bidding.

Apart from GST numbers, buyers have to produce genuine FSSAI licences to ensure that actual users bid for the wheat.

The bid size has also been kept smaller at 10-100 tonnes as against 3,000 tonnes in the last open market sale to ensure that small flour millers come to the auction.

The Centre has decided to start e-auction of rice from July 5. In the initial phase, around 500,000 tonnes of rice will be offered to buyers at a reserve price of Rs 3,100 per quintal.

On the issue of states being allowed to participate in open market sale to feed their own schemes, Meena said the Centre felt that it was giving free food to around 800 million under the new Pradhan Mantri Gareeb Kalyan Anna Yojana while prices for the remaining 600 million needed to be controlled.

This article has been republished from The Business Standard

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