Traders have threatened to stop imports of food grains alleging inaction by the state government to waive off five per cent value added tax (VAT) on pulses, wheat and wheat products.

Earlier, the traders had gone on a two-day strike in December last year, stopping import of pulses, wheat and wheat products. The state is heavily dependent on import of these products to cater to its requirement.

"The state government has failed to take action on its assurance (to waive off VAT). Apart from stopping of importing of these food grains we may resort to hunger strike. We may stop importing all kinds of food grains to express our annoyance against the lackadaisical attitude of the state government," said Sudhakar Panda, general secretary, Odisha Byabasayee Mahasangha.

However, the nature of the strike will be decided only after a meeting of traders scheduled on Wednesday, he added.

Traders had assured the government to support and assist in the exercise to withdraw VAT on the scheduled items latest by April 1, 2015.

The traders' bodies have been demanding exemption of VAT on the commodities already done by majority of states. Twenty three states have exempted VAT on pulses, wheat and wheat products, they said.

In lieu of VAT waiver of five per cent, traders have proposed imposition of one per cent entry tax which can fetch Rs 50 crore to the state's revenue basket.

Consumption of pulses in the state stands at about 0.9 million tonne per year with a business turnover of about Rs 4,500 crore. Odisha produces less than 10 per cent of the total demand.

Similarly, the demand of wheat and wheat products in Odisha is estimated at 1.2 million tonne while the output of these items in the state is pegged at 0.35 million tonne. Traders said, the state government collects about Rs 30 crore VAT from pulses against the target of Rs 225 crore. The collection suffers as unscrupulous traders import the item through back channels from neighbouring states where it enjoys VAT exemption and do not report the import or sale to evade tax.