Centre plans 15 mn tonne additional storage capacity

Proposes to invest Rs 7,000 crore through public-private partnership route.

The Central government is planning to create an additional warehousing capacity of 15.2 million tonnes at an estimated investment of Rs 7,000 crore by end of 2012. The proposed capacity addition would be done under a public-private partnership (PPP) model, K V Thomas, Union minister of state for consumer affairs, food and public distribution, said.

Talking to reporters on the sidelines of a conference on Negotiable Warehouse Receipts System (NWRS), organised by Federation of Indian Chambers of Commerce and Industry (FICCI) and Warehousing Development and Regulatory Authority (WDRA), here today, he said the government has already allocated additional storage capacities for each state and the work would be completed by the end of 2012.

Presently, the gap in warehousing is estimated at 32 million tonnes. The present capacity is of the order of 6.2 million tonnes.

“There is a need for states and the central government to work together to create additional warehousing capacities and the private sector should come forward to invest more. There is a growing feeling that the time has come to remove fiscal and financial isolation in which agricultural economy has been functioning. And proper backward and forward linkages are established with other spheres of economic activities,” he said.

Thomas said, financing in agriculture has always been a risky investment for banks and financiers due to low margins and uncertain operations. Financiers often consider physical collateral like land and farm machinery difficult to enforce or of very little resale value.

Amid such situation, warehouse receipts can be an alternative for farmers and processors. Though warehouse receipts finance is still not a very popular method of financing in India, it is expected to show an upward trend as the Centre has made Warehouse Receipts “negotiable” with the enactment of the Warehousing (Development and Regulation) Act 2007.

It is expected to enhance their interest in lending and allow banks to improve quality of their lending services in respect of agricultural goods deposited by farmers in the registered warehouses, he said.

Last year, the Warehouse Development and Regulatory Authority was set up to promote scientific warehousing in the country, regulate and enforce accreditation of warehouses, build a system of quality certification and grading of commodities and usher in a system of negotiable warehouse receipts in the country.

The government of India has also extended the duration of the seven-year guarantee scheme for construction of warehouses to 10 years to attract more private players in storage and warehousing, Thomas added.