Traders want reduction in duty on chana, govt says no

Chana is majorly imported from Australia and Tanzania and it attracts an import duty of 60 per cent.

A section of the traders is demanding a reduction in import duty to around 35-40 per cent to tide over any shortage of the commodity as the new crop will start hitting the market only around mid-February.

Despite strong demand from a section of the traders, the central government is not looking to lower the import duty on chana (gram), the biggest pulses grown in India immediately, to avoid giving any negative signals to farmers just ahead of the sowing season that will start in next few weeks.

Chana is majorly imported from Australia and Tanzania and it attracts an import duty of 60 per cent.

A section of the traders is demanding a reduction in import duty to around 35-40 per cent to tide over any shortage of the commodity as the new crop will start hitting the market only around mid-February, while they claim that pipeline stocks is on the verge of exhaustion due to heightened disposal as part of the Garib Kalyan Package for Covid-19 relief and also open sales.

However, top official sources said that the thinking in the government is that any duty reduction at this stage could impact market sentiment and pull down prices below the Minimum Support Price (MSP) of Rs 5100 per quintal thus negatively impacting farmers’ sentiment.

Sowing of chana will start from late October in some parts of India.

At present, chana prices are ruling at around Rs 5300 per quintal, but trade sources are saying that prices might climb upto Rs 6000 per quintal in the coming weeks if supplies are not augmented.

“It is our firm believe that when the market prices are ruling above the Centre-mandated Minimum Support Price (MSP) of chana of Rs 5100 per quintal for the 2020-21 season, any imports at this juncture will give a very adverse signal to farmers,” a senior official said.

Chana is the biggest pulses grown in India primarily in the rabi sowing season.

In 2019-20, India produced around 23 million tonnes of pulses in total, of which share of chana was nearly half at 11.35 million tonnes. The crop is largely cultivated in the central India states of Madhya Pradesh, UP, Rajasthan etc.

A senior official said that because of the prevailing good price of chana in the market Nafed was able to liquidate a portion of its around 2.9 million tonnes of pulses at a healthy rate of over Rs 5400-5500 per quintal, thus causing a minimum loss to the exchequer.

At present, it is left with stocks which is good enough to manage the free distribution through the Garib Kalyan Package for the remaining period. Under the Garib Kalyan Package, the central government has allocated for free distribution 1 kilogram of pulses per month to all the ration card holding families along with migrants labours since April till November.

Around 1.6 million tonnes of pulses are proposed to be distributed under the scheme of which significant quantities is chana whole.

Meanwhile, traders said that unless the import duty is lowered, chana prices will climb steadily as the new crop is expected only around February while the pipeline stocks are going dry.

“India per month consumes 700,000-800,000 tonnes of chana and in the next three and half months (till middle of February) it will require around 2.0-2.5 million tonnes of chana, so unless the duties are lowered, there could be a shortage,” said Bimal Kothari, vice chairman of Indian Pulses and Grains Association (IPGA) told Business Standard.

He said even if duty is lowered only around 700,000-800,000 can come that too from Australia as the new crop is getting harvested there from November.

“This too will not be enough but could provide some relief to the prices and consumers,” Kothari said.

He said if the duty is reduced to 35-40 per cent, the landed cost of Australian chana will be around Rs 5500 per quintal.

Australia, used to produce around 2 million tonnes of chana, entirely for the Indian market, but its output dropped to 250,000-300,000 tonnes in the last few years due to drought and higher Indian crop.

But, this year its production has risen and India is the biggest market for its chana.