Britannia eyes wheat import after duty cut
Flour mills and major wheat consuming companies such as Britannia have started exploring options to import wheat, after the government reduced the import duty on the cereal grain from 25 per cent to 10 per cent.
Britannia’s wheat consumption is estimated at around a million tonnes (mt) and it consumes around 0.15 mt of sugar. Half of its wheat requirement has been met. ITC is the largest wheat buyer among the big companies in India, with close to 2 mt annually. However, it procures wheat domestically. Parle, a biscuit maker, is the second largest major wheat consumer at around 1.5 mt.
Talks of cutting wheat import duty had started about a month ago. Imports of 0.7 mt to 1 mt were contracted even before the duty cut was announced, resulting in some moderation in wheat price, which has fallen 3 per cent to around Rs 1,800 a quintal in the wholesale market.
A source said Britannia was looking at importing wheat. The company did not comment on the import plan but said the duty cut would help in controlling inflation. Manoj Balgi, head-procurement for Britannia Industries Ltd, said: “The reduction in import duty on wheat is an important step by the government. It will help in the reduction of wheat inflation and will bring stability in the off-season. With the recent reduction in the import duty, the government has taken various pre-emptive measures. As a result, a separate supply line for wheat will be created."
The wheat crop is expected to be around 10 mt lower than the earlier estimate of 83 mt. The government has yet not revised that number. However, the Food Corporation India was facing a scarcity and had reduced its open market sale quote from 5,000 tonnes an auction to 2,000 tonnes early this month.
Domestic and multinational traders have already contracted 0.7-1 mt of wheat import prior to the duty cut. A part of this was from Ukraine and the rest from Australia. Now market players estimate another 2-3 mt of wheat to be contracted. Southern mills and companies are expected to import more. Imports were earlier happening only at the Tuticorin port. Now contracts have been made to import wheat via the Jawaharlal Nehru Port, Mumbai, and the Mudra port.
Initial contracts were made at $190-193 a tonne but with demand raising, the import cost will be around $200 a tonne, said a large multinational importer. The duty cut might not bring down wheat price but it would remain capped at the current level. Had the duty not been cut, “prices could have skyrocketed," he added.