India may allow mills to import wheat

India's Farm Minister Shared Pawar said on Friday that the government was seriously considering allowing private flour mills and other wheat users to import the grain under the open general licence scheme.
He said that private sector imports could attract confessional duty, but did not say whether they would be duty-free, as is the case with state-run trading firms.
Last week, Pawar said India would import three million tonnes of wheat in addition to 500,000 tonnes already contracted from Australian exporter AWB Ltd to build stretched supplies and cap runaway prices.
"The 3.5 million tonnes of wheat imports we have decided upon are sufficient for the public distribution system. If there is a shortfall, we will import more," Pawar said on Friday State-run and private traders were expected to play a role in bringing the grain to India.
New Delhi allows private traders to import wheat, but has historically levied a high duty to discourage them from buying overseas. If the government does extend importing rights as Pawar suggested on Friday, only actual users were likely to be allowed to bring in wheat at confessional duties to ensure that the supplies do not flow to traders playing the market for quick profits.
Government agencies have been trying to replenish depleted stocks by buying newly harvested wheat, but this has met with only limited success with farmers holding back their produce in anticipation of prices rising later in the year.
The crop had dwindled last year to 70-72 million tonnes because of bad weather, after experts had forecast a record haul of 76 million tonnes. "We expect 72-73 million tonnes of wheat production this year.
The market situation is not that bad," Pawar said on Friday, adding that prices had been rising in the spot market in response to lower procurement. A farm ministry official told Reuters that government agency had by these weeks procured 8.2 million tonnes of wheat, compared with 11.7 million at the same time a year ago.
India's annual demand is 70-72 million tonnes, and the government needs to maintain a large stockpile to rein in prices. It produces only one wheat crop in a year. The government to cool prices or cope uses the reserve stocks with possible shortfalls in other foodgrains.