Home Commodities Govt considering to reduce insurance burden for commodities warehousing

Govt considering to reduce insurance burden for commodities warehousing


The Centre is planning to increase the ceiling on credit under Agriculture Infrastructure Fund (AIF) from current ₹2 crore after finding that those who are genuinely interested to set up or expand units are not getting sufficient credit at the subsidised interest rates.

At a stakeholders’ meet on AIF, many entrepreneurs had complained that the current credit limit is too low and insufficient to raise warehousing capacity, said Samuel Praveen Kumar, a joint secretary in Union Agriculture Ministry. “We are trying how best it can be enhanced,” he said addressing an event on agri-warehousing, organised by NCDEX on June 7.

He also said that as many as 70 per cent of the applications under AIF scheme is for dry storage, whereas there is equally a need for expanding the capacity under cold storage.

According to latest data, of ₹15,128 crore worth projects applied by stakeholders, the government has so far sanctioned ₹9,293 crore whereas the disbursal is ₹5,085 crore. A major chunk of the disbursal is due to efficiency of public sector banks whereas the co-operatives have disbursed only ₹279 crore out of projects worth ₹3,044 crore approved due to various factors.

Modern silos

Still, the Food Ministry is considering to involve co-operatives to build up steel silos for wheat storage on the Australian model under a different scheme, a senior official said. “There is a need for closer co-ordination between ministries rather looking at other countries to understand basics problems in warehousing sector,” a warehouse owner said.

Incidentally, Amit Mundawala, Managing Director of Agribazaar, said a steel silo built in Kota, Rajasthan by his company has been idle for want of wheat as Food Corporation of India (FCI) does not keep its grain there, even as there is a government programme to create 100 lakh tonne capacity of modern silos across the country.

Speaking at the event, Warehousing Development and Regulatory Authority Chairman TK Manoj Kumar said the regulator is in the process of reducing regulatory burden as there is scope for further improvement in agricultural warehousing.

“Warehousing is not just about storage. It also deals with other ancillaries in which pledge finance has a key role. There is definitely a case for improving the warehousing sector,” Kumar said after releasing a report on ‘Agricultural Warehousing in India: Trends, Constraints and Policies’ jointly published by NCDEX Investor Protection Fund Trust and IIT-Bangalore.

Banks supplied pledge funding of roughly ₹1,400 crore against electronic Negotiable Warehouse Receipts (e-NWRs) in the 2020-21 fiscal year, while it has already reached ₹500 crore in the first two months of this fiscal year, he added.

The chairman also said that about 2,750 warehouses have so far been registered with the WDRA out of 35,000-40,000 public storage facilities. More than 60 per cent of 1.05 lakh warehouses is captive and used by industry for their own requirement.

Meanwhile, the report on agri warehousing has suggested the government to revive the Private Entrepreneurs Guarantee (PEG) scheme based on observations made by the Comptroller of Auditor General of India (CAG). It also recommended use of hermetic storage instead of covered area plinth (CAP), and promotion of Farmer Producer Organisations (FPOs) and more private sector participation.

Published on

June 08, 2022

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