The Hindu Business Line : ‘Warehouse infrastructure crucial for receipt financing’

Stoking hopes: Mr Prabhakar Patil (left), Director, Forward Markets Commission, with Mr Gopal Srinivasan, Chairman, CII-Tamil Nadu, at a conference on commodity markets organised by CII in Chennai on Thursday. –

Our Bureau

Chennai, Dec. 6 The development of a good warehouse infrastructure would go a long way in improving incomes of farmers. Now is the time when the infrastructure will take root and develop in India, essentially because of the recent passage of the Warehousing (Regulatory & Development) Bill. The Bill is awaiting the President’s assent.

Electronic records

When the Act comes into force, a Warehouse Regulatory and Development Authority would be set up. All the warehouses in the country would need to register themselves with the Authority, Dr Prabhakar R Patil, Director, Forward Markets Commission, said on Thursday.

He was speaking at a Conference on Commodity Markets, organised by the Confederation of Indian Industry.

Later, speaking to journalists, Dr Patil noted that the warehouses would need to maintain all the records in electronic form.

They would also have assayers, who would certify the quality of goods.

This is a critical measure, because in the absence of such a certificate, the quality of goods underlying a warehouse receipt is always a suspect. Without an assurance of the quality of the goods, it proves difficult to pass on warehouse receipts, like cheques are done.

The Warehousing (Regulatory & Development) Bill permits warehouse receipts to be negotiable instruments.

Thus, when the Bill becomes an Act, the process of building a robust warehouse infrastructure would begin.

Useful to farmers

Dr Patil said the commodity markets had proven to be very useful to farmers, especially those in the northern States. To prove this point, he said the difference in prices of commodities in the post-harvest season and the lean season, had come down drastically in the last few years.

Earlier, prices would slump immediately after harvest, when farmers would have no choice to dump their goods into the market. But today, because they could sell in the futures market for a better price, they stand to be benefited, he said.

Asked for details about the warehouse shelf space in the country, Dr Patil said the Commission was trying to collect the statistics. He said there was a tremendous interest from Indian corporate sector in setting up warehouses.

Dr Patil also said it was important to train people for functioning as assayers—assayers play a critical role in warehousing and receipt financing.

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‘Warehouse infrastructure crucial for receipt financing’