Flour mills to buy wheat from govt through e-auction

Come January and flour mills across the country will start buying wheat from government under open market sales scheme (OMSS) via electronic auction process on NCDEX Spot Exchange and National Spot Exchange (NSEL).

State-owned Food Corporation of India (FCI) has decided to use electronic trading platform of both the bourses to offer wheat under OMSS.

"We are ready and are awaiting instruction from FCI, which is expected any moment," said Rajesh Sinha, head, NSpot.

NSpot is promoted by National Commodity and Derivatives Exchange, while Financial Technologies (India) is the main promoter of NSEL.

Under OMSS, FCI has offered 1.5 million tonnes wheat in the first tranche in four states — Delhi, Haryana, Karnataka, and Andhra Pradesh.

According to an FCI official, the procurement agency will shortly allocate the exact quantity of wheat to be auctioned to both exchanges and actual auction might be conducted the following week.

"Each bourse may get one state each in south and north India," the official said.

The minimum quantity has been fixed at 100 tonnes and then in multiples of 10 tonnes, Sinha said.

However, a government official said e-auction might not be very successful as there were several restrictions.

"There are many restrictions on sale and the government policy on this is not very clear cut. Firstly, the sale and delivery of wheat even through e-auction method is limited to the same state where the auction is done. Also, the maximum quantity per buyer is limited to just 1,000 tonnes," he said.

Minister for Agriculture, Food and Consumer Affairs Sharad Pawar had last week announced a Rs 200 a quintal reduction in prices of open market sale wheat, but FCI is yet to announce its revised price for the sale.