Industry demands removal of 40% import tax on wheat to cool prices: Report

The head of a prominent industry body in India has urged authorities to swiftly eliminate the 40 per cent wheat import tax to facilitate the purchase of grain from overseas, reported news agency Reuters.

This step is seen as crucial to calming local wheat prices in the world’s second-largest producer of the staple. India has been implementing measures like limiting traders’ holdings and offering state reserve grain to bulk consumers to control soaring wheat prices.

Wholesale wheat prices have surged by around 11 per cent over the past four months, reaching a seven-month high in August, added the report.

“One of the best ways to ensure that ample supplies lead to lower prices is to import wheat, but a 40 per cent duty makes any import unviable,” Pramod Kumar S, president of the Roller Flour Millers’ Federation, told Reuters in an interview.

“The government should immediately abolish the wheat import duty to ensure that private trade can import wheat.”

Kumar emphasized the necessity of the government abolishing the import duty to enable private trade to import wheat. He noted that millers and private traders could import 2 to 3 million metric tons of wheat once the duty is removed.

Particularly in southern states like Kerala and Tamil Nadu, flour millers are grappling with shortages due to transportation costs from regions where wheat is primarily cultivated.

He added that removing the import duty could lead to immediate imports of Black Sea wheat, which would alleviate supply shortages until the next harvest. Kumar estimated that Black Sea wheat could be procured at $280-$290 per ton, including costs, insurance, and freight, making it nearly $40 cheaper than supplies from other major producers.

The supply of wheat has dwindled due to a smaller crop size. Kumar previously told the news agency that the 2023 wheat harvest was at least 10 per cent lower than the government’s projected record of 112.74 million metric tons.

This article has been republished from Indiatoday