The Indian government has decided to allow wheat imports through southern ports at a lower Customs duty that could be either zero or 15 per cent, two sources in the know of the development said.

The move comes on the heels of wheat prices surging to a six-month high due to supply shortage and demand ahead of the festival season.

“Wheat imports will be allowed through southern ports such as Thoothukudi, Kochi, Krishnapatnam. This is to ensure that the imported wheat is not used for seed purposes,” said the first of the two sources.

While one of the two sources said wheat import will be allowed at 15 per cent, another said it would be at zero duty. Currently, a total of 44 per cent Customs duty is imposed on wheat imports. 

FCI procurement

 “There is also a proposal to allow importers to supply wheat to the Food Corporation of India and they may be given a duty waiver,” said the first source.

However, the second source said the FCI will not be procuring any wheat from the importers. “The government’s stand on FCI purchase has been made clear,” the source said.

Meanwhile, the Government will likely take a call on allowing exports of white rice that were in transit after letters of credit were signed before the ban on exports was imposed on July 20.

India is opening up its wheat market to imports after five years, when high quality wheat particularly from Australia were shipped into the country. 

Though wheat production has been estimated at a record 112.74 million tonnes (mt) this year, the trade has been facing supply shortage. The FCI procured 26.2 mt of wheat this year, while some 30 mt are with farmers for resowing. Another 9-10 mt were declared by the trade and industry as stocks held by them.

Government officials told businessline that they are looking into the whereabouts of at least 40 mt of wheat that supposed to be available. 

However, trade and former government officials say the Agriculture Ministry had probably over estimated the wheat crop this year as well as 2022. 

“We are seeing the impact of that. Probably, the crop was not more than 100 million tonnes,” a former Food Ministry official said. 

Wheat prices increased to ₹2,550 a quintal, the highest since February, on Tuesday. Since last year, wheat prices have been ruling above the minimum support price of ₹2,015 and ₹2,125, respectively.

In 2022 and 2023, the wheat crop was affected by unseasonal rains and heatwave, resulting in the country banning exports, including wheat products.