Govt to consider options including import duty cut if wheat prices do not fall

FCI to sell 4lt of wheat on June 28 and 5lt of rice July 5 in first round of e-auction. As part of 1.5 million tonnes (mt) of wheat to be sold under OMSS in first tranche as announced on June 12, the FCI will float a tender on Friday to sell 0.4 mt for which e-auction will be held June 28.

Amid apprehension of no immediate reduction in wheat prices, the government has indicated that a duty reduction in wheat may be considered to allow imports if prices do not fall to a ‘comfortable level’.

“We are seeing an inflationary trend in retail prices of wheat and rice. The government has directed us to start Open Market Sale Scheme (OMSS). The focus is on bringing down retail prices,” said Ashok K Meena, Chairman and Managing Director of Food Corporation of India (FCI). He further said that if prices do not fall to a comfortable level, there are other instruments, including import duty reduction, available with government. “All options are under consideration,” he added.

The FCI CMD hoped that the retail prices would start coming down soon after measures are announced. At present, the import duty on wheat is 40 per cent.

As part of 1.5 million tonnes (mt) of wheat to be sold under OMSS in first tranche as announced on June 12, the FCI will float a tender on Friday to sell 0.4 mt for which e-auction will be held June 28. Similarly, in the first round of auction for rice to be held on July 5, as much as 0.5 mt will be offered for which the tender will be floated next week.

Stock limits:

On June 12, the government imposed stock limits on wheat with immediate effect till March 2024 in a bid to check hoarding and contain rising prices. However, the portal was made operational only on Friday where traders and others can declare their wheat stock on a weekly basis.

The reserve price of wheat has been fixed at ₹2,150 per quintal for Fair and Average Quality (FAQ) grain and ₹2,125 per quintal for under relaxed specifications (URS). The reserve price of rice has been fixed at ₹3,100 per quintal. Amid demand for an upward revision in reserve price of wheat, the Food Ministry on Friday issued another circular reiterating the same rates as announced earlier.

Meena said the bidding is also limited to local buyers by ensuring that the GST registration of the State is mapped and checked before the stocks are released. To identify genuine processors and traders, a valid FSSAI licence is also made mandatory for participation. However, the FSSAI rule will not be mandatory in first round of e-auction. So , in the first round of wheat auction the mandatory stock declaration will not be enforced.

FCI has 8.7 mt of wheat and 29.2 mt of rice surplus after meeting buffer norms and food law obligation that can be used for the OMSS if the situation warrants, he said.

The pan India average mandi (agriculture crop market yard) prices were ₹2,196/quintal on May 15, ₹2,225 on May 22, ₹2,277 on May 29, ₹2,307 on June 5, ₹2,295 on June 12 and ₹2,310 on June 19.