Govt may hike import duty on wheat to 25% to check imports

New Delhi: The Centre may raise import duty on wheat to 25 percent from the current 10 percent to restrict overseas purchases when domestic stocks are surplus.

Last month, the government imposed a 10 percent import duty on wheat -- for the first time since 2006 -- after private flour millers started importing from Australia amid sluggish supply of high-protein wheat varieties used to make pasta and pizzas.

Millers are resorting to imports despite surplus stocks of other varieties of wheat with FCI, the nodal agency for foodgrain procurement and distribution.

"The Food Ministry has proposed raising import duty on wheat to 25 percent from 10 percent to cut imports and protect the domestic market. The matter will be discussed at a meeting with the revenue department Thursday," a senior government official told PTI.

The Agriculture Ministry is also in favour of a duty hike as it feels that the overseas buying might send a wrong signal on local prices when the country has surplus stocks, especially ahead of sowing of new crop from next month, the official said.

"Already, 5,00,000 tonnes of premium Australian wheat has landed in the country. More imports are likely to take place as private firms are keen to purchase even paying 10 percent import duty taking advantage of fall in global prices," the official said.

Private firms are importing high-protein wheat varieties as the domestic crop was damaged due to rains and hailstorms earlier this year.

The state-owned Food Corporation of India (FCI) procured 28.08 million tonnes of wheat in 2014-15 crop year (July- June), of which 26.62 million tonnes have been purchased under the relaxed quality norms due to the crop damage.

The government has decided to sell on priority the wheat procured under the relaxed quality norms through ration shops, welfare schemes and open market sales.

Wheat production in India, the world's second-biggest grower, is estimated to have declined to 88.94  million tonnes in the 2014-15 crop year, as against the record production of 95.85 million tonnes in 2013-14.

Still, the government has a huge stock of wheat at over 34 million tonnes due to bumper procurement this year and carryover stock from the previous years.