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Government mulls lowering import duty, limiting traders’ stock to tame rising wheat prices, ET Retail

<p>Representative Image</p>
Representative Image

New Delhi: As average retail prices of wheat and atta continue to rise, the government is looking at several options, including reduction in the import duty and reducing the quantity of the foodgrain that wholesalers and traders can keep with them at any given point of time, to bring them down. It is likely to take these steps soon, to increase availability in the market and also avoid a spike in prices during the poll year.

Sources said they are concerned over the increase in prices despite the government limiting the stock of wheat traders can keep and selling stocks held by Food Corporation of India (FCI) in the open market, which is still continuing.

Currently, the import duty on wheat is 40% and this has been in force since April 2019. It was 30% earlier.

Sources said since the international price of wheat is close to the MSP and availability is ample, reducing import duty would prompt private players to get the foodgrain from other countries.

On the need for bringing down the stock limit an official said, “It seems that some players are still holding on to the excess wheat they have despite our stock limit norms being in place. We may have to reduce the limit from the current norm of 3,000 tonnes for wholesale traders.”

The government imposed stock limit norms in June this year till March next year. This was done after a gap of 15 years to curb the rise in wheat and atta prices.

Though FCI has 283 lakh tonnes of wheat, which is enough to meet the food security requirement and also the targeted open market sale, sources said import of wheat will increase the supply in the market.

Meanwhile, FCI has so far sold 6 lakh tonnes of wheat to bulk buyers through weekly e-auctions since June 28. However, price realised through this open sale has increased from Rs 2,153 per quintal on June 28 to Rs 2,182 per quintal on August 2. A food ministry official said they are monitoring this trend as well.

In response to a question on price rise of cereals to the Parliament this week, the food ministry said the all-India average retail prices of rice, wheat and atta have recorded an year-on-year increase of 10.5%, 5.2% and 8.5%, respectively.

  • Published On Aug 5, 2023 at 04:11 PM IST

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