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India to allow duty free imports of 500,000 tons corn

India to allow duty free imports of 500,000 tons corn

MUMBAI: India will soon ask state-run traders to import half a million tonnes of duty-free corn after a second straight drought cut output, in what would be the country’s first overseas purchase in 16 years, two government sources said on Thursday.

India has agreed to allow state-run traders such as PEC Ltd to import corn to curb rising prices and avoid shortages, said a government official directly involved in the decision-making process.

The official requested anonymity because he is not authorised to talk to the media. The government will import only non-genetically modified varieties, another government official said. Trade ministry spokesman Rajinder Choudhury had no immediate comment.

India is traditionally a major corn exporter to southeast Asia, but higher local prices because of the first back-to-back drought in nearly three decades and rising domestic demand have hampered exports. The country has not struck even a single deal so far in the current fiscal year, after selling 2.8 million tonnes in 2014/15. Local corn prices have jumped 28 percent in the past six months.

The dramatic switch in India’s position in the market is likely to bring further cheer to rival suppliers like Brazil, Argentina and the United States. The country’s absence from the export market is already helping rivals grab Asian market share and its imports would give a boost to global prices which have fallen nearly 13 percent in the past six months.

“India’s demand will lift corn prices in the world market since everyone counts India as an exporter, not as an importer,” said a Mumbai-based dealer with a global trading firm.