India may scrap wheat import duty, lower its stock limit.

The Indian government has decided to lower the stock limit for wheat to 2,000 tonnes from the current 3,000 tonnes in an effort to ensure ample availability in the domestic market. The move follows the Centre’s finding that over 40 million tonnes (mt) of wheat have been hoarded in the country, escaping the current stock limit provisions. Besides, the government is considering lowering the import duty up to zero from the current 44 per cent (including cess) soon. When asked about options available to the Government to check rising wheat prices, Food Secretary Sanjeev Chopra said the Centre has various options that are under consideration, including tweaking the stock limit as well as reducing the import duty. He did not specify when these measures would be in place. He, however, said the Government is aware of the fact that in the weekly auction by the Food Corporation of India (FCI), the average selling price has been increasing every week. Chopra also said there was no plan under consideration for government-to-government import, especially from Russia. Mystery over stocksAccording to a June 12 notification, 10 tonnes of wheat limit has been fixed for any retail outlet, including big chains while 3,000 tonnes for traders and wholesalers. For processors of atta and other flour products such as sooji and maida, the maximum capacity will be either 75 per cent of the annual installed capacity of the mills or 10 months of actual requirement (June 2023-March 2024) based on monthly capacity. According to sources, traders have declared to the government that they have 2.9 mt and processors have 6.2 mt, totalling 9.1 mt of wheat as on July 31. After factoring 30-35 mt, which is used for own consumption and seed and feed purposes, and an additional 9-10 mt declared stock held by processors and stockists, there should be 42-48 mt of wheat available in the market throughout the year, officials said. “When this stock outside the radar of stock limit will be released in the market no one knows,’ an official source said on August 3. The Agriculture Ministry has estimated wheat production in 2022-23 crop year at a record 112.74 mt. The wheat started arriving in the market from April and the government procured about 26.2 mt of the production. The official Agmarknet portal shows that the 21 mt of wheat arrived at various agri market yards (mandis) across the country between March 1 and July 31 this year. Rising retail pricesThe all India average retail prices of wheat and atta increased in June and July from their previous month’s rates. According to Consumer Affairs Ministry data, wheat prices were Rs.31.32/kg in April, Rs.31.27 in May, Rs.31.67 in June, Rs.31.96 in July and Rs.32.13 in August (1-3). Similarly, atta rates were Rs.36.55/kg in April, Rs.36.42 in May, Rs.36.95 in June, Rs.37.18 in July and Rs.37.37 in August (1-3). The weighted average selling price in this week’s auction increased to Rs.2,208.33/quintal for FAQ from Rs.2,182.68 in the previous week. The reserve price for FAQ wheat is Rs.2,150/quintal. The weighted average selling price of URS wheat in current round was Rs.2,219.29, up from Rs.2,173.85 in previous round, whereas the reserve price is Rs.2,125. The highest price in the August 2 auction of FCI was recorded Rs.2,500/quintal in West Bengal and Maharashtra.

This article has been republished from The Hindu Business Line