With domestic production of wheat likely to increase, govt extends import duty till June

Government on Tuesday extended the 25% import duty on wheat by another three month, till June, to curb imports as domestic production is estimated to rise by over 8% this year.

Wheat production is projected to increase by 8.42% to 93.82 million tonnes in 2015-16 crop year, as against 86.53 MT in the previous year, despite deficient monsoon during last year. In a notification dated March 28, the Central Board of Excise and Customs (CBEC) said that 25% duty on import of wheat will continue beyond March 31, up to June 30, 2016.

Also, the basic customs duty of 40% on import of Ghee Butter and Butter oil, has been extended by six months to September 30. The government has extended the wheat import duty as it has surplus stock in godowns and harvesting of the rabi crop has started.

Food Corporation of India (FCI), the nodal agency for procurement and distribution of foodgrains, has set a target to purchase 30.5 MT this year from farmers. As against the buffer norm of 7.6 MT as on April 1, the present stock of wheat in the central pool is 13.5 MT. During the last one year, FCI has sold 7 MT of wheat through open market operations.

The government had in August 2015 imposed 10% import duty on wheat, for the first time since 2006. On October 19, the government raised import duty on wheat to 25% to restrict overseas purchases in the wake of falling global prices.

"In view of the continued fall in international prices of wheat and the anticipated adverse impact of increased imports during the first half of this financial year, basic customs duty on wheat has been increased from 10% to 25% for a period up to March 31, 2016," Finance Ministry had said in October last.