AMENDMENTS TO THE WAREHOUSING (DEVELOPMENT AND REGULATION) ACT OF 2007

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Context

The Union Food and Public Distribution Ministry has suggested major amendments to the Warehousing (Development and Regulation) Act of 2007.

About the Act

The Government enacted the Warehousing (Development and Regulation) Act, in 2007. The WDRA was established in 2010.
The main objectives of the Warehousing (Development and Regulation) Act, 2007 are to make provisions for the development and regulation of warehouses, negotiability of warehouse receipts, establishment of a Warehousing Development and Regulatory Authority (WDRA) and related matters. The Negotiable Warehouse Receipts (NWRs) issued by the warehouses registered under this Act would help the farmers to seek loans from banks against NWRs and will avoid distress sale of agricultural produce. It is beneficial for a number of other stakeholders such as banks, financial institutions, insurance companies, trade, commodities exchanges as well as consumers.
WDRA was established to ensure scientific storage by prescribing infrastructural and procedural standards. Captive warehouses such as the FCI are excluded from the ambit of the Act.

Amendments

At present, registration with the Warehousing Development and Regulation Authority (WDRA) is optional. After the proposed amendment, the central government plans to make it mandatory for third-party warehouses that stock agricultural commodities to register with Warehousing Development Authority by amending the Warehousing (Development & Regulations) Act (WDRA).
Central government will have powers to exempt any class of warehouses from registration with the Authority. This will ensure a gradual and non-disruptive change to a regulated warehousing system.
The composition of the authority will also be increased to six from three.

Concern

The Samyukt Kisan Morcha said the repealed Act had also talked about similar provisions such as electronic trading in transaction platform and freedom for trading at farmgate, cold storage, warehouse and processing units.
This would just help some big corporate houses so that they gain even more control over the warehousing and cold storage sector.

Significance

The proposed amendment will also strengthen Warehousing Development and Regulatory Authority, giving it enforcement powers.
The proposed amendment will encourage scientific warehousing ecosystems, thus helping farmers store their produce in scientific godowns, an official aware of the development. It will also make it compulsory for warehouse operators to issue digitised negotiable warehouse receipts (NWR), making the system more transparent.
Lending institutions like banks will have access to NWR repositories, thereby increasing ease of lending.
Farmers can pledge to get bank loans against their agri-produce kept in warehouses.
While the government will start with registration of warehouses with capacity of 5,000 metric tonnes and above, it will later move on to bring under its purview all warehouses up to 100 metric tonnes capacity, thus bringing under its ambit a lot of warehouses at the farm gate and benefiting farmers directly.

Final Thought

The Government needs to alleviate the fears of all the stakeholders and bring reforms effectively.