The Hindu Business Line : Ministry `in no hurry' to put in force grain export scheme

EVEN as the country's wheat production is set to touch an all-time high this year, the Commerce Ministry is "not in a hurry" to operationalise its new foodgrain export policy before the ensuing rabi marketing season, beginning April.

"We are working on the guidelines for determining the extent of reimbursement of costs to be made to the exporters and the necessary documentation procedures. As this is a new scheme, it should be totally foolproof with no scope for fraudulent claims. We are, therefore, not in a hurry to meet any immediate deadline," a top Commerce Ministry official told Business Line.

He was responding to a specific query whether the operational guidelines would be ready in time for exporters to contract purchases of the standing wheat crop, which will start arriving in the markets two months from now. The export policy announced last month envisages exporters undertaking direct grain purchases from the mandis and claiming reimbursement of freight, port handling (`fobbing') costs and other `WTO-compatible' expenses. The reimbursement would be subject to their exporting the grain and furnishing supporting documents.

This is as against the present arrangement, where exporters source their grains entirely from the Food Corporation of India's (FCI) stocks. "In the FCI scheme, there were instances of unscrupulous exporters lifting subsidised rice and wheat and, rather than exporting, diverting it to the domestic market. We cannot allow this in the new scheme, which is the reason for evolving foolproof documentation procedures," the official added.

The Chairman of the All-India Grain Exporters' Association, Mr D.P. Singh, however, felt that the existing duty-remission schemes such as the Duty Entitlement Pass Book (DEPB) and the Duty Free Replenishment Certificate (DFRC) already prescribed rigorous procedures for exporters.

"Today, if an exporter wants to claim benefits under DEPB or DFRC, he has to submit copies of his bank-endorsed invoice, bill of lading, shipping bill, GR-1 document and bank realisation certificate. When such standard documentation exists, why have anything over and above this? Moreover, the scheme is to be implemented by the Directorate-General of Foreign Trade (DGFT), which, unlike FCI, has the wherewithal to ascertain whether exports have actually taken place," he pointed out.

Mr Singh said that "time was running out" and "we need a clear picture now, so that the country can take advantage of a bumper crop and farmers are given a choice to sell their wheat to buyers other than FCI."

According to the Agriculture Ministry, the progressive acreage under wheat has crossed 27.1 million hectares (against the normal 26.6 million hectares). And with an extended winter and a favourable soil moisture regime (bolstered by recent rains) expected to raise average yields to 2.8 tonnes -2.9 tonnes per hectare, there is every likelihood of output surpassing even the 1999-2000 record of 76.37 million tonnes (mt), leave alone last year's drought-affected 69.32 mt.

What is further enthusing exporters is high world prices. Recent Indian wheat shipments have been contracted at $161-$163 per tonne free-on-board or Rs 7,325 per tonne, against $105-$110 a year ago. If an exporter were to buy wheat at the minimum support price of Rs 6,300 per tonne and incurs a freight cost (from Punjab to Kandla) of Rs 800 and fobbing charges of Rs 500 per tonne (including interest), it would add up to Rs 7,600 per tonne.

At current world prices, exporters would make a killing even if the reimbursement rate (or subsidy) is kept at Rs 1,000 per tonne. Contrast this to the subsidy of Rs 4,500 per tonne under the FCI scheme till two years ago!

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