About Warehousing Development & Regulatory Authority (WDRA)
- WDRA is a statutory body created under the Warehousing (Development & Regulation) Act, 2007 and shall have the duty to regulate and ensure implementation of WDRA, 2007 and promote orderly growth of warehousing business.
- It is headed by a Chairman and two full-time members.
- WDRA aims to ensure that interests of farmers are protected through
- Growth and development in warehousing sector.
- Improve fiduciary trust of depositors and banks.
- Increase in liquidity in rural areas.
- Encourage scientific warehousing of goods.
- Lower cost of financing.
- Promote shorter and efficient supply chains.
- Enhance reward for grading and quality.
- Ensure better price risk management.
- Only Warehouses registered with the WDRA can issue negotiable warehouse receipts.
- Requirements for warehouses for registration with WDRA:
- Warehouse should be constructed as per BIS/CWC/FCI standards and is storage worthy.
- Has all safety and security arrangements for stock and premises.
- Has got requisite manpower with adequate experience in warehousing.
- Availability of requisite infrastructure in weighing, grading and preservation.
- Warehouse should have its own Standard Operating Procedures (SOPs) or adopts model SOP of WDRA.
- Adequate insurance is taken for stock against fire, theft, burglary, misappropriation, riots, strikes or terrorism.
- Financial network and security deposit for securing negotiable warehouse receipts issued.
- Commodities covered against which NWRs can be issued by WDRA: Currently, 136 agricultural commodities including cereals, pulses, oilseeds, spices, rubber, tobacco, coffee etc. are notified under the WDRA Act for issuing negotiable warehouse receipts. Also, 24 horticultural commodities for cold storage and 9 non-agricultural commodities have been notified.
About Negotiable Warehouse Receipts (NWRs):
- NWRs issued by WDRA will help farmers to seek loans from banks against the NWRs to avoid distress sales of agricultural produce during the peak marketing season and to avoid the post-harvest storage loss. WDRA Act allows issue of NWRs in writing form or electronic form.
- Benefits of NWRs
- Increased liquidity in rural areas.
- Encouragement of scientific storage of goods and thereby reducing post-harvest losses.
- Lower cost of financing
- Shorter and more efficient supply chains
- Enhanced rewards for standard section, grading and quality.
- Better price risk management
- Better returns to farmers and better services (Quality of Goods) to consumers.
About Electronic Negotiable Warehouse Receipt (e-NWRs):
- According to Amendment to Warehousing (Development & Regulation) Registration of Warehouses Rules, 2017, no registered warehouses under the WDRA act will issue NWRs in physical form and shall register with one or more repositories registered with WDRA for issuing negotiable warehouse receipts has migrated to system of launching electronic Negotiable Warehouse Receipt in 2018 which is a IT based eNWR ecosystem.
- Repositories for eNWRs: Two repositories have been notified for issuing eNWRs: National E-Repository and CDSL Commodity Repository.
- Benefits of eNWR
- Avoidance of forgery/loss/tamper/mutilation of a physical NWR.
- Avoidance of multiple financing against the same NWR.
- Reduction of monitoring costs and building credibility amongst market participants.
- Market participants to have secured accessible to view and manage their warehouse receipts via online portal.
- Easy access to finance by enabling multiple transfers without physical movement of goods.
- Splitting of NWRs for partial sale/pledge/withdrawal.
Steps for Mainstreaming of eNWRs
- RBI’s Priority Sector Lending Guidelines prescribes for loan against pledge/hypothecation of agricultural produce. Thus, loans up to Rs 75 lakhs can be given against eNWRs.
- Integration of e-NWRs with e-NAM Platforms: farmers/holders of an e-NWR issued by a registered warehouse can sell their underlying stocks on e-NAM platform and have better price discovery. The registered warehouse is required to be declared as a market sub-yard by the state authority for trade on e-NAM APMC market.
Challenges restricting expansion of NWR ecosystem:
- Warehousing sector has been mostly un-organised and highly fragmented.
- Registration of warehouses is voluntary and hence scope for increase in the number of registered warehouses is limited.
- There is inadequate regulatory framework under the Act.
- Registration system and issuance of NWRs had been paper based.
- Monitoring & surveillance system of registered warehouses had been inadequate.
Way Forward
- Easier registration of warehouses with WDRA.
- Making it mandatory for newer warehouses getting assistance under government schemes to register with WDRA.
- Training and capacity building of warehousemen.
- Awareness among farmers about benefits and access of Negotiable Warehouse Receipts.
