No imprisonment, compulsory registration are part of proposed changes in warehousing law

Prabhudatta Mishra | | Updated on: Jul 27, 2022

Centre likely to introduce amendment bill in current Parliament session

In the first phase, warehouses with a capacity above 5,000 tonnes will be required to required to go for mandatory registration 

In the first phase, warehouses with a capacity above 5,000 tonnes will be required to required to go for mandatory registration 

The Centre plans to amend the Warehousing (Development and Regulation) Act, 2007, and is likely to introduce a Bill in the current parliament session after the Cabinet approves it. Registration of warehouses above 100 tonnes capacity is proposed to be made mandatory, while the government also wants to decriminalise the law by abolishing provisions for jail upto 3-years.

If Parliament passes the amendment Bill as it is, there will be a sharp rise in the penalty for various offences, according to sources in the Food Ministry, which has prepared the Bill after discussion with other ministries. It has now been sent to the Law Ministry for final draft, before it is taken for cabinet approval.

In the draft amendment bill, more powers have been provided to the regulator Warehousing Development and Regulatory Authority (WDRA) to investigate, enforce and impose penalties, the sources said. The government has also proposed to simplify the registration process, accepting negotiable receipts only in electronic form.

Out of an estimated 60,000 warehouses in the country, 4,700 have been registered with the regulator since 2010, when it came into existence. But only 2,910 warehouses are active, the sources said.

Mandatory registration

The proposed mandatory registration will be applicable for warehouses which deal with notified commodities of WDRA and only for non-captive ones, leaving aside about 50,000 warehouses which are privately used by the owners. Currently, there are 160 agri commodities notified by WDRA. Besides, nine non-agricultural commodities -- aluminium, copper, nickel, lead, zinc, tin, brass, steel and iron ore recently got added to list.

In the first phase, warehouses with a capacity above 5,000 tonnes will be focused on the mandatory registration followed by godowns with a capacity between 1,000 tonnes and 5,000 tonnes and parallelly initiatives will continue to persuade warehouses having 100-1,000 tonnes capacity, an official said.

Proper infra

The official further said the WDRA registration ensures proper infrastructure and scientific warehousing of goods. It will give confidence to the banks for increasing post harvest loans and increase liquidity in rural areas and farmers income. The government has already allowed online registration where warehouses can apply without an intermediary.

This will further boost pledge financing against electronic negotiable warehousing receipts (e-NWR) and will put in place uniform warehouse standards improving efficiency and ease of doing business, the official said.

In 2021-22, total loans disbursed by banks against e-NWR more than doubled to ₹1,492 crore from ₹732 crore in the previous year. The trend has further improved as a credit against e-NWR was ₹751 crore as of July 25 in the current fiscal. Officials said this year the number of e-NWR issued by WDRA-approved agencies is likely to exceed 1 lakh. As many as 94,736 such receipts were issued in 2021-22.

Published on July 27, 2022
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