Duty cut may not cool down lentil prices

With prices moving up, the government has reduced the import duty on lentils for three months. However, lentil prices in Canada has since increased and so the measure may not ease the rates in the domestic market, find experts.

The government has reduced the basic customs duty on lentils (masoor) imported for all the countries other than the US from 30 per cent to 10 per cent. For the imports from the US, the duty has come down from 50 per cent to 30 per cent. The reduced customs duty rate shall be applicable during the period from June 2, 2020 to August 31, 2020.

“The government has reduced import duty on masoor dal to 10 per cent for three months. and this aimed at increasing domestic availability and curbing price rise. Historically, after any pandemic, food inflation has been seen rising 25-30 per cent,” said Ajay Kedia, MD, Kedia Commodities.

According to Unupom Kausik, president, NCML, lentil prices have risen from Rs 48,000 a tonne to a high of Rs 56,000 in the recent times. However, he feels that the import duty reduction for a short period will not bring down the prices, as the Canadian lentil prices have already moved up 10 per cent postthe duty reduction.

“Canada is the largest supplier of lentils to India. Of the 600,000 to one million tonnes of lentils that get imported into the country, the bulk of it comes from Canada. In this short window of three months, Indian importers will have to buy the old crop of Canada as Australia and Ukraine are not left with much stocks. Hence the price of the old crop rose 10 per cent soon after the announcement,” he said. If the duty reduction window was open till December, the new Candian crop would have arrived in October and it would have contained the price rise, he said.