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Our Bureau

No levy till Dec 31; shipments seen unfeasible

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New Delhi Jan. 25 In its continuing battle against inflation in primary commodities, the Centre on Thursday, announced duty-free imports of maize (corn) till December 31. This follows its earlier decisions to exempt customs duty on wheat and pulses, besides reducing import duties on edible oils.

TRQ regime

Maize imports till now were governed by a tariff rate quota (TRQ) regime, under which up to five lakh tonnes (lt) could be imported at 15 per cent basic customs duty, with quantities above this charged to 50 per cent.

Spot prices of maize at Nizamabad (a benchmark centre) are now ruling at around Rs 711 a quintal, against Rs 557 per quintal at this time a year ago. The high prices have been mainly due to a shortfall in this year's kharif output, compounded by increase in international prices on account of diversion of the crop for ethanol (bio-fuel) manufacture.

Currently, corn futures for March delivery on the Chicago Board of Trade (CBOT) are ruling at $4 per bushel (25.4 kg), which translates into around $157.5 per tonne free-on-board. "At these rates, imports are not feasible even at zero duty. This is because you have to add $42-43 per tonne towards freight. Also, since the imported maize in Panamax vessels comes in loose (open) form, we have to arrange for bags and labour at the ports, which will mean another Rs 1,000 per tonne towards port handling, phytosanitary and other clearances. The all-in-all cost at the port itself will, then, come to Rs 950-1,000 per quintal," said Mr Ganpatraj L. Chowdhary, Managing Director, Riddhi Siddhi Gluco Biols Ltd, a leading Ahmedabad-based starch manufacturer.

Trade sources also say the only country from where maize can be imported now is the US, given that China has already stopped diversion of the crop for ethanol and is slated to soon even turn an importer. Similarly, another potential supplier, Argentina, has levied an export tax to discourage shipments.

Impact

"The decision will only have sentimental impact as of now, by putting a ceiling on future price increases. We were bracing ourselves to domestic prices crossing Rs 1,000 per quintal levels by June-July.

By announcing duty-free imports till end-December, a clear message will be sent out to the market", Mr Chowdhary pointed out. Of the country's total 14-15 million tonnes (mt) annual production, only a third or so is used for human consumption, with the poultry (seven mt), livestock (1.5 mt) and starch (1.5 mt) industries accounting for the rest.

More Stories on : Economy | Foodgrains | Agricultural Policy | Exports & Imports | Excise and Customs

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