Exempt accredited warehouses from stock limits, says Sebi

The Securities and Exchange Board of India (Sebi) has written to the finance ministry seeking exemption for exchange-accredited warehouses from stock limits under the Essential Commodities Act.

“We want warehouses registered with commodity derivatives exchanges to be exempt from stock limits,” said S K Mohanty, executive director, Sebi. He was speaking on the sidelines of a two-day conference on agriculture supply chains here on Monday. There are 1.4 million tonnes of warehousing space accredited with exchanges.

Stock limits now apply in sugar and pulses. Among pulses, only chana is allowed to be traded on the futures market. Here too, launch of new contracts has been suspended because of a spike in spot prices. Sugar mills and traders face stock limits.

“With Warehousing Development and Regulatory Authority (WDRA) registration, we are sure of 60-70 per cent of the oversight. Over and above WDRA regulations, we introduce norms to improve efficiency,” Mohanty added. Experts said the government should only purchase the minimum quantity required for market intervention through minimum support prices. The food subsidy could be paid into beneficiaries’ accounts, they added.

“Private participation in grain procurement in eastern India, augmenting the storage capacity without actually engaging in physical procurement, leads to significant waste of government funds,” said Anil Choudhary, managing director and chief executive officer of National Bulk Handling Corporation. India has storage facilities for 120 million tonnes of grain against an annual output of 265 million tonnes. Only 10 per cent of the country’s fruits and vegetables can be stored in cold chains.