Wheat Current Affairs

Government doubles import duty on wheat to 20%

The Central Board of Excise and Customs (CBEC) under Union Finance Ministry has doubled import duty on wheat to 20% from 10% to curb cheap shipments and give positive price signal to farmers in ongoing Rabi season. It also imposed import duty of 50% on peas to check cheaper shipments from countries like Canada to boost domestic prices. The import duty on peas has been imposed to curb shipments and boost domestic prices.

Purpose

In the last two years India, world’s second biggest wheat producer has been importing wheat after local production fell due to successive droughts. India had imported 5.75 million tonnes of wheat in 2016/17 fiscal year ended on March. Doubling of import duty aims to give positive price signal and encourage farmers to grow wheat in more area as farmers have started planting of rabi (winter) wheat crop. Moreover, Government does not want wheat growers to follow way of pulses farmers who shifted to other crops this kharif season as prices remained low just before sowing period owing to bumper crop last year.

Pulses Issues

India produced record 22 million tonnes of pulses in 2016-17 crop year which led to fall in domestic prices, even below MSP. Moreover, country also imported about 5 million tonnes of pulses last fiscal.

Import Duty

It is a tax collected on imports and some exports by customs authorities of country. It is usually based on value of goods that are imported. Depending on context, import duty may also be referred to as tariff, import tax, customs duty and import tariff.

The purpose of import duty is to raise income for local government and to give market advantage to locally grown or produced goods that are not subject to import duties. It is sometimes used as tool to penalize a particular nation by charging high import duties on its products.

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Union Government scraps import duty on wheat  

The Union Government has waived the import duty on wheat to zero from 10 per cent for an indefinite period.

This move aims to improve domestic availability in the wake of rising prices and concerns about the wheat crop in 2016-17.

The duty was waived because of uncertainty over the wheat output this year. Despite a rise in area sown, questions are raised over condition of the wheat crop, low fertiliser and pesticide use due to and fears of a warm winter.

The waiving of import duty will make wheat imports (especially from Australia and Ukrainian) considerably cheaper. This will fuel imports to over 6 million tonnes in 2016-17. This will be the highest wheat imports in the 10 years.

Background

The wheat production in the country will be around 93.50 million tonnes in 2016-17 as per the government estimates. However, many experts have pegged the figures around 90 million tonnes due to year-on-year droughts in 2014 and 2015. Moreover, Union Government’s own wheat stocks are at an all-time low due to less procurement.

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