The Hindu Business Line : Rationalisation of freight classification

THE rationalisation of freight classification, particularly for wheat, has left the roller flour mills in the South embittered. This is because the rationalisation leaves the mills paying 33 per cent more for bringing wheat from the northern part of the country.

The issue is more serious when wheat flour doesn't suffer from any such rationalisation, according to the Tamil Nadu Roller Flour Mills Association (TNRFMA).

"The rationalisation will only lead to further dumping of wheat flour by mills in North India," said Mr V.K. Gupta, President, TNRFMA, in separate letters to the Railway Minister, Mr Lalu Prasad, and the leader of the Opposition, Mr L.K. Advani.

Flour mills in South India have to transport wheat from the North. Also, the Food Corporation of India has different rates for delivering wheat to the mills. It charges the highest rate for mills in the South. On the other hand, mills in North India get wheat cheaper and they also sell it at lower prices. The mills in the South have been demanding uniform pricing for sale of wheat by FCI.

TNRFMA has also been alleging that the mills in the North have been evading sales tax payment for selling flour in the South. "The tariff hike will lead to further trade distortion, causing material injury to the flour mills here and threatening their very existence," Mr Gupta said.

"The 33 per cent hike in the freight rate is certainly on the higher side and the industry cannot afford to absorb it easily," he said, adding that the hike could lead to diversion of wheat freight from railways to roads transport.

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