On August 7, 2015, the Ministry of Finance issued a notification imposing a basic custom duty of 10 percent (ad valorem on CIF value) on imports of wheat effective till March 31, 2016, i.e., end of MY 2015/16. The Finance Minister Arun Jaitley made the announcement in the Parliament and estimated that the revenue implications of this measure is likely to be about INR 900 million ($14 million). The GOI decision to impose the import duty, which was being deliberated since early July, is meant to curb wheat imports on reported 'sufficient' government-held wheat stocks.

Reports suggest that by end-June 2015, private trade had contracted for imports of about 500,000 MT of wheat, mostly from Australia, to augment the requirement for quality wheat due to untimely rains at the time of harvest of the domestic crop. With the reports of likely imposition of an import duty of 10 percent, there has been a lull in new import contracts since 2nd week of July. While imports of wheat at 10 percent import duty is not feasible at current domestic prices, import prospects are likely to improve after October/November on expected tight supplies of quality wheat for blending with domestic 'weather affected' MY 2015/16 wheat.

Market sources report that about 400,000 MT of wheat has already been shipped into India before the imposition of the import duty. The government's expectation on revenue implication suggests an additional 500,000 MT wheat imports, Post estimates an additional 400,000 MT imports during the balance of the marketing year. Consequently, Post MY 2015/16 wheat import is forecast lower at 0.8 MMT. Post continues to estimate MY 2015/16 production at 87 MMT on expected higher losses due to untimely rains and hailstorms during harvest. Consumption estimates have been adjusted to reflect the lower imports in the PSD.

Wheat PSD

(Area in thousand hectares, quantity in thousand metric tons, and yield in MT/hectares)

Wheat

2013/2014

2014/2015

2015/2016

Market Begin Year

Apr 2013

Apr 2014

Apr 2015

India

USDA Official

New Post

USDA Official

New Post

USDA Official

New Post

Area Harvested

30,000

30,000

31,530

31,530

30,600

30,600

Beginning Stocks

24,200

24,200

17,830

17,830

17,200

17,200

Production

93,510

93,510

95,850

95,850

90,000

87,000

MY Imports

25

25

52

52

1,000

800

TY Imports

22

22

250

250

1,000

800

TY Imp. from U.S.

0

0

0

0

0

0

Total Supply

117,735

117,735

113,732

113,732

108,200

105,000

MY Exports

6,053

6,053

3,402

3,400

300

300

TY Exports

5,354

5,354

1,550

1,200

300

300

Feed and Residual

4,800

4,800

4,500

4,500

4,800

4,800

FSI Consumption

89,052

89,052

88,630

88,632

91,200

88,000

Total Consumption

93,852

93,852

93,130

93,132

96,000

92,800

Ending Stocks

17,830

17,830

17,200

17,200

11,900

11,900

Total Distribution

117,735

117,735

113,732

113,732

108,200

105,000

Yield

3.1170

3.1170

3.0400

3.0400

2.9412

2.8431