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Indian state agency plans wheat import tenders

India's State Trading Corp plans to issue global tenders for the import of 500,000 tonnes of wheat.

india Updated: Feb 06, 2006 14:28 IST

India's State Trading Corp plans to issue global tenders for the import of 500,000 tonnes of wheat once it receives an official order from the food ministry, a company official said on Monday.

"We should get the government notification by tomorrow or by Wednesday and after that we will start the tender process," the official said.

India, stung by spiraling domestic prices, last week said it would immediately import 500,000 tonnes of wheat to boost supplies, offset inflationary pressure and ensure food security.

It is the first time since 1999 that the government has resorted to importing duty free wheat through the state-run corporation in southern India, where open market prices have been rising in non-wheat producing states.

India levies a 70 per cent duty on wheat imports, making it unviable for private traders to import the grain.

The official said the corporation plans to issue several tenders as it would not be possible to buy such a large quantity through a single tender.

"We have already started our homework. We have to look at which south Indian port is in a position to handle wheat and in which places grains are required."

But traders said none of the four major southern ports have wheat storage facilities and it was unclear how the grain would be handled once it had arrived.

"It is a case of the blind leading the blind since India is importing wheat after nearly six years," said one New Delhi trader.

"We expect some clarity by the end of the week when the corporation is expected to finalise the tender specifications," said another trader.

Some traders expected the trading firm to sell directly to the flour millers and not use the imported grains to augment government stocks.

Traders had been expecting India, a wheat exporter in recent years, to order imports after grain agencies cut procurement but government officials had said they were confident they would not be needed.

Australia's monopoly wheat exporter AWB Ltd said in December India might import about one million tonnes of wheat in 2006 to meet supply shortages.

Food Minister Sharad Pawar said on Thursday that wheat prices in most parts of the country were under control with the government releasing additional stocks into the open market, but prices in southern India remained high.

He said wheat prices in south Indian markets were ranging around Rs 1,100 ($24.95) to Rs 1,200 per 100 kg, compared with close to Rs 900 in rest of the country.

The country had wheat stocks of around 4.7 million tonnes on Feb 1.

The minister has estimated India's new crop wheat output at around 74-75 million tonnes. Last year, the country's wheat output dropped to about 72 million tonnes due to poor weather.

India's wheat crop is sown in November and December and harvesting begins in April in the main northern growing states of Punjab and Haryana. Harvesting for the early grown varieties in Madhya Pradesh begins in late February.

First Published: Feb 06, 2006 14:28 IST