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Govt rules out easing of FCI wheat tender norms

Harish Damodaran

K.R. Srivats

NEW DELHI, June 12

THE Government has ruled out any easing of the Food Corporation of India's (FCI) tender norm for wheat exports requiring bidders to furnish `irrevocable, non-transferable' bank guarantees amounting to the difference between FCI's ex-godown price of Rs 43 0 per quintal for exports and the Rs 700 per quintal rate under its open market sale scheme (OMSS).

A senior official from the Ministry of Consumer Affairs and Public Distribution told Business Line that the condition was imposed in order to check diversion of wheat released by FCI specificaly for export purposes to the domestic market. This, in turn, was a distinct possibility considering that wheat is currently selling at around Rs 590 per quintal in Delhi alone and in the Rs 700-750 per quintal range in southern markets.

``We don't want a situation where exporters take delivery from FCI godowns at Rs 430 per quintal and, instead of exporting, offload the same in the domestic market. To prevent this, we have asked them to furnish a guarantee for the difference between the export price and the Rs 700 per quintal rate at which FCI is making available wheat to roller flour mills under the OMSS,'' the official said.

He added that once the exporters show the relevant documents attesting the shipment of their consignment, the bank guarantee would be revoked. Under the tender conditions, the guarantee is valid for one year.

The Government is also concerned over the possibility of the subsidised wheat released for exports finding its way back to FCI's godowns. In fact, there has been largescale incidence of traders buying wheat from farmers at Rs 550 per quintal in Uttar Pra desh -- where prices have crashed below even last year's minimum support price -- and selling these to FCI and State Government agencies at this year's MSP of Rs 610 per quintal.

Even in the case of exports, there have been instances in the past, where rice exported to Bangladesh and other neighbouring countries have re-entered the country, with traders taking advantage of the relatively high domestic prices here.

Meanwhile, a delegation from the Associated Chambers of Commerce and Industry of India (Assocham), which met the Union Minister of Consumer Affairs and Public Distribution, Mr Shanta Kumar on Monday, reiterated the demand that Export Houses, Trading Hous es, etc be allowed to lift wheat and rice from FCI's godowns without paying the earnest money deposit, security deposit and bank guarantee for the difference between the export price and the OMSS rate. They suggested that in lieu of these `stringent' req uirement, FCI may consider taking a `suitable legal undertaking' from these recognised export houses.

The delegation also pressed for relaxation of the tender specification mandating lifting of a minimum 50,000 tonnes lot for exports. ``We asked the Minister to consider allowing one single time order quantity of minimum 10,000 tonnes in place the existin g 50,000 tonnes norm,'' a delegation member said.