The Hindu Business Line : Nspot in talks to introduce e-trading in rural markets

National Spot Exchange (Nspot), promoted by NCDEX, has initiated talks with State Governments to modernise and introduce electronic trading platform at Agriculture Produce Marketing Committee (APMC).

Mr Rajesh Sinha, Head-Spot Exchange, Nspot, said: "We are in dialogue with various State governments for the APMC project, and our proposal is in various stages of approval with Karnataka, Gujarat, Rajasthan, Maharashtra and Madhya Pradesh."

Pilot projects

The total project entails an investment of Rs 1,000 crore over 10 years. On a pilot basis, Nspot has proposed to take over 10 mandis with an investment outlay of Rs 100 crore, said Mr Sinha. There are over 28,090 rural markets, of which 7,557 are regulated. Nspot has zeroed in on 100 APMCs registering a monthly turnover of Rs 50 crore.

Given the State Government's backing and reputation of NCDEX raising fund for the project will not be a difficult task, he said.

Better tax compliance

On the brighter side, the State governments stand to gain from better tax compliance by the traders. For instance, Mr Sinha said of the total trade of Rs 8,000 crore a year at the Vashi APMC market, the State Government loses about 40 per cent revenue due to tax evasion and leakage in mandi cess.

Assuring that there will not be any additional cost for the buyers and sellers, Mr Sinha said the second generation traders open for change in the system and will be more than willing to adapt to the new technology.

Stock limit hurdle

The stock limit imposed by the State governments seems to be posing a big challenge for the electronic spot exchanges. The Maharashtra Government has fixed 200 tonnes as stock limit for sugar, and made it mandatory for traders to register at the particular district. The registration process requires residential proof.

"The need for trader registration has caused lot of hardship. How traders from Kolkata buying sugar on the spot exchange can provide a residential proof in Kolhapur (where the delivery centre is located). We are dealing the issue with the State Government," said Mr Sinha.

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