Four ships waiting to berth at Kandla port to load wheat for exports

Traders said some 190,000 tonnes of wheat are struck for want of fresh approvals; another 1.5-1.6 million tonnes are at the ports

Four shipping vessels are still stuck at Kandla port till Tuesday waiting for berths to load the wheat that cleared for exports more than 10 days ago, traders claimed.

Of these, trade sources said each has a capacity to carry 30,000-65,000 tonnes of wheat (see chart). Till a few days back, eight ships were waiting to berth despite having all the clearances. But in the last few days, four shipments were cleared by the officials, traders added.

All these consignments had met Customs requirements before May 13 and have valid shipping bills and letters of credit (L/cs), the traders claimed.

That apart, another 1.5-1.6 million tonnes of wheat are lying in the ports as they either don’t have valid L/cs or advance payment have not been made against them.

This makes a total of almost 2 million tonnes of wheat lying in Indian ports waiting for export clearance.

“These shipping vessels, which have all the clearances in place, were not being allowed to berth as authorities are asking for additional documents after the ban came into force, causing demurrage losses to exporters and shippers alike,” a senior official from a global trading firm told Business Standard.

He said on average since May 13, the exporters have been paying around $25000-$40000 per day per vessel demurrage charge, which is a sizable amount.

“As per the Foreign Trade Policy and Handbook of Procedures that guides all Indian export commitments, goods in transit which have been entered in their course of exports and have all the valid documents in place will have to be allowed to be shipped. So, if an exporter has valid shipping bills before May 13 and all other documents and clearances are in place should be allowed to complete his obligation,” a senior official from Indian Trade Association (ITA), an association of commodity traders, told Business Standard.

Traders said already several leading export and grain trading houses from India have invoked the force majeure clause thereby cancelling their export commitment entered with the local traders.

In international trade, invoking a force majeure clause saves the exporters from legal proceedings from the buyer and ensures that the latter won’t take the seller to arbitration for default in delivery.

Force majeure clause comes into effect within seven days from the unforeseen event which in this case was May 13, when wheat exports were banned.

However, invoking this clause does not guarantee that demurrage and other claims are not to be paid by the exporter.

Meanwhile, the Directorate General of Foreign Trade (DGFT) in a notification issued on Monday said that it will not allow wheat for exports where irrevocable Letters of Credit (LCs) have been issued after May 13 (the export ban date).

The notification was issued after it was noticed that some fraudulent backdated LCs showing date of issuance on or prior to May 13 were being submitted by some unscrupulous exporters for the issue of Registration Certificates (RCs). But, as per the LCs message exchange date between Indian and foreign banks and Swift message show it has been done after May 13, an official statement said.

Trade sources said that as against total export orders of around 4.2 million tonnes of wheat, LCs of almost 5.5 million tonnes were submitted to the government for registration after the ban, pushing it to take cognizance of the fraud. 

Vessels Waiting To Berth To Carry Indian Wheat
Port Name	Vessel Name	Quantity (in tonnes)	Destination
Kandla	Viet Thuan	30,000	Sri Lanka
Kandla	Baltic Wasp	60,500	Bangladesh
Kandla	Stratton	65,000	Indonesia
Tuna*	Paro	38,500	Nigeria
*Tuna is jetty in Kandla port
NOTE: Traders claimed that all the consignments have all clearances in place before May 13
Source: Traders and exporters