The Hindu Business Line : NSEL signs MoU with Gujarat for agri-biz

Ahmedabad, June 8 The newly-formed National Spot Exchange Ltd (NSEL) has signed a Memorandum of Understanding with the State-owned Gujarat Agro-Industries Corporation Ltd (GAIC) to create a strategic alliance for development of agri-business and other allied services, providing an electronic market platform in the State and empowering the farmers to discover prices as a one-stop solution.

NSEL is carrying out a membership drive this month across India and would start end-to-end testing and mock exercises next month before launching work in August.

It plans to reach out to all the 7,500 agricultural produce marketing committees (APMCs) across India in a year or so. Membership with NSEL would enable a member to trade without any licence from an APMC.

It would commence work in Karnataka, Maharashtra and Gujarat, which are framing a set of new rules under the existing APMC Act.

Expansion plans

It plans to enter Kerala and Bihar, which have no APMC Act, and has already signed MoUs with Rajasthan and Madhya Pradesh.

By next year, the new exchange hopes to expand its network across all major States in the country, said Mr Anjani Sinha, Managing Director and Chief Executive Officer, NSEL, after signing MoU with the GAIC Managing Director, Mr S.C. Srivastava.

In Gujarat, NSEL has already received 40 requests for membership and hopes to have 500 members soon. He said the delivery would be both in demat and physical forms. For gold and silver, it would be in T+1 day while in agro-commodities it would be in T+3 or T+4 days, depending on the commodity. The exchange would have electronic debit and credit facilities. This would eliminate transaction of cheques and bank drafts between traders, who would have a national-level, risk-free market and would be able to take bank finance against the stocks they hold in NSEL warehouses, which are being networked.

Present dealing

At present, NSEL would deal with oilseeds, pulses, rice etc but not non-perishable commodities.

It may, however, go in for storable commodities such potatoes and onions. Mr Sinha said the NSEL-GAIC alliance would go beyond providing services relating to trading of agricultural commodities. It aids GAIC’s network of 1,400 centres providing agricultural input services.

The association, by creating a vibrant electronic spot market for agricultural commodities in Gujarat, would open up an opportunity for farmers to trade on the platform for benefits. GAIC will obtain membership of NSEL that will entail all its agro-service and business centres to have access to the exchange’s terminal to trade commodities. The two bodies would also jointly organise awareness programmes across Gujarat to educate farmers on the benefits of spot trading.

NSEL, jointly promoted by the Multi-Commodity Exchange of India Ltd (MCX), Financial Technologies India Ltd (FTIL) and National Agricultural Cooperative Marketing Federation of India Ltd (NAFED), was launched in New Delhi in February 2005 to provide a national-level, institutionalised electronic spot exchange as a customised solutions to the needs of farmers, traders, processors, exporter-importers and others.

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