Govt may have to remove import duty on wheat, Siraj Hussain says

The government has begun deliberating with stakeholders as it now fears that offering 1.5 million tonnes of wheat sales on the open market may not have the desired effect to curb any price hike. On the other hand, many experts conveyed to the government that removing the 40 percent import duty on wheat may help improve domestic availability and check any further price hike.

“Going forward, the government may consider allowing duty-free imports, so that the private sector can import wheat. This may help contain food inflation, especially if monsoon rains are deficient due to El Nino,” said Siraj Hussain, former director of the Food Corporation at India (FCI) and also former Minister of Agriculture.

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During a stakeholder meeting held late on Monday evening, industry representatives told Food Ministry officials that the government will have to increase the reserve price under the Open Market Sale Scheme (OMSS) to a realistic level of Rs 2,350/quintal plus freight and at the same time. The sources said that the import is free of customs duties. The sources said that as long as the current flat rate of 2,125 rupees/quintal across the country exists, processors will not be imported.

Besides, the government has also been told that the purpose of capping auction quantity at 100 tons per entity will only increase prices because flour millers will not be able to participate but rather buy at a higher price from traders who will secure the quantity from FCI through online auction.

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“An average of 3,000 tons of wheat per month is needed by the flour mill, while the government provides a maximum of 200 tons per month as it announces one auction every two weeks. The government also knows very well that it is the small traders who will participate and offer the grain from the FCI to whoever offers them higher prices,” he said. An industry official, familiar with the deliberations, “No brat atta will buy through auction, nor will mill owners participate.”