I.C.

CHADDA
DEPUTY GENERAL MANAGER (TECH)
CENTRAL WAREHOUSING CORPORATION
NEW DELHI
 THE PRESENTATION

NEED FOR LICENSED WAREHOUSING

THE WAREHOUSING (DEVELOPMENT & REGULATION) ACT, 2007

WAREHOUSE RECEIPT SYSTEM

IMPACT OF THE ACT ON AGRI BUSINESS/FOOD SECURITY

 NEED FOR LICENSED WAREHOUSING

 WIDESPREAD RURAL INDEBTEDNESS OF

FARMING COMMUNITY.

 ROYAL COMMISSION ON AGRICULTURE, 1928

RECOMMENDED ESTABLISHMENT OF LICENSED

WAREHOUSES.

 ALL INDIA RURAL CREDIT SURVEY COMMITTEE,

1954 REITERATED THE NEED FOR A

WAREHOUSING SYSTEM IN PUBLIC SECTOR.

 NEED FOR LICENSED WAREHOUSING

 WAREHOUSING BEING CAPITAL INTENSIVE

WITH LOW RETURNS, PRIVATE SECTOR WAS SHY
OF INVESTMENT AND HENCE PUBLIC SECTOR
WAS INEVITABLE
 AGRICULTURAL PRODUCE (DEVELOPMENT &
WAREHOUSING) ACT, 1956 WAS ENACTED,
LATER REPEALED AND REPLACED BY
WAREHOUSING COPORATIONS ACT, 1962.
 CENTRAL & STATE WAREHOUSING
CORPORATIONS (CWC & SWCs) WERE
ESTABLISHED UNDER THIS ACT.
 EXISTING WAREHOUSE RECEIPT SYSTEM
 WAREHOUSE RECEIPT ---------- A
RECEIPT IN THE PRESCRIBED
FORM, ISSUED BY A
WAREHOUSEMAN, TO ANY
PERSON DEPOSITING GOODS IN
THE WAREHOUSE.

 THE LICENCED WAREHOUSEMAN

IS AUTHORISED TO ISSUE A
NEGOTIABLE OR A NON-
NEGOTIABLE WAREHOUSE
RECEIPT.

 WAREHOUSE RECEIPT IS A
DOCUMENT OF TITLE TO GOODS
AS PER THE SALE OF GOODS ACT,
1930.
 EXISTING WAREHOUSE RECEIPT SYSTEM
 THE WAREHOUSING RECEIPTS AT PRESENT DO NOT ENJOY THE
FIDUCIARY TRUST OF DEPOSITORS AND BANKS, AS THERE IS
FEAR OF NOT BEING ABLE TO RECOVER THE LOANS IN EVENTS,
SUCH AS FRAUD, OR MIS-MANAGEMENT ON BEHALF OF THE
WAREHOUSE OR INSOLVENCY OF DEPOSITOR.

 THE AVAILABLE LEGAL REMEDIES ARE ALSO TIME CONSUMING

AND INADEQUATE. FURTHER, THE FORMAT OF WAREHOUSE
RECEIPTS USED IN THE COUNTRY IS NOT UNIFORM.

 HENCE, THERE ARE IMPEDIMENTS IN THE NEGOTIABILITY OF

WAREHOUSE RECEIPTS CREATING DIFFICULTIES TO THE
FARMERS AND OTHER DEPOSITORS OF GOODS.
 EXISTING AGRI PRODUCE MARKETING SYSTEM
FARMERS IN INDIA REALISE JUST ABOUT 30% TO 35% VALUE OF THEIR PRODUCE VIS-A-VIS
65% TO 70% IN THE DEVELOPED ECONOMY DUE TO

 INEFFICIENT AND FRAGMENTED.

 LACK OF MARKET CONFIDENCE.

 HIGH RISK PERCEPTION

 WAREHOUSE RECEIPT FUNDING BY THE BANKS

NOT VERY POPULAR
 LOWER LIQUIDITY AND HIGH PRICE FOR CREDIT.
 STAMP DUTY ON WAREHOUSE RECEIPT IN SOME
STATES .
 NEED FOR NEW WAREHOUSE RECEIPT SYSTEM
 THEREFORE, NEED WAS FELT TO ESTABLISH A
NEGOTIABLE WAREHOUSE RECEIPT SYSTEM
FOR ALL COMMODITIES INCLUDING
AGRICULTURAL COMMODITIES.

 ON ONE HAND, IT WILL MAKE WAREHOUSE

RECEIPTS A PRIME TOOL OF TRADE AND
FACILITATE FINANCE AGAINST IT
THROUGHOUT THE COUNTRY, THUS HELPING
THE FARMING COMMUNITY.

 ON THE OTHER, IT WILL ALLOW BANKS TO

IMPROVE QUALITY OF THEIR LENDING
PORTFOLIO IN RESPECT OF GOODS DEPOSITED
IN THE WAREHOUSES.
 OBJECTIVES & EXPECTED BENEFITS

 THE ACT INTENDS TO LAYDOWN REQUIREMENTS FOR

WAREHOUSE RECEIPT TO BECOME VALID
NEGOTIABLE INSTRUMENT.

 THE MAIN OBJECTIVE OF THE ACT IS TO

ENCOURAGE SCIENTIFIC WAREHOUSING OF
GOODS, LOWERING THE COST OF FINANCING,
ENSURING A SHORTER SUPPLY CHAIN, ENHANCING
REWARDS FOR GRADING AND QUALITY AND
PROVIDING FOR BETTER PRICE RISK MANAGEMENT.
 OBJECTIVES & EXPECTED BENEFITS

 THE INTRODUCTION OF A NEGOTIABLE WAREHOUSE RECEIPT

WOULD INCREASE LIQUIDITY IN RURAL AREAS AND WOULD GIVE
A SAFETY NET TO FARMERS AGAINST DISTRESS SALE.

 THOUGH, THE MINIMUM SUPPORT PRICE OPERATIONS TAKE

CARE OF A NUMBER OF CROPS, THE ABILITY OF THE FARMER
TO KEEP HIS SURPLUS GOODS IN SCIENTIFIC WAREHOUSE
AND OBTAIN INSTITUTIONAL CREDIT ON THE BASIS OF SUCH
RECEIPTS HAS BEEN HAMPERED DUE TO ABSENCE OF AN
APPROPRIATE LEGISLATION, WHICH ENABLES THE SAME.
THE WAREHOUSING (DEVELOPMENT & REGULATION)
ACT, 2007

THE ACT RECEIVED THE ASSENT OF THE HON’BLE PRESIDENT

OF INDIA ON 19TH SEPTEMBER 2007. THE NEW LEGISLATION IS
FOR THE DEVELOPMENT & REGULATION OF WAREHOUSES,
NEGOTIABILITY OF WAREHOUSE RECEIPTS AND ESTABLISHMENT
OF A WAREHOUSING DEVELOPMENT & REGULATORY
AUTHORITY(WDRA).

WDRA HAS COME INTO EXISTANCE W.E.F. 26th OCT.2010 TO

EXERCISETHE POWERS CONFERRED ON, AND TO PERFORMTHE
FUNCTIONS ASSIGNED TO IT UNDER THE SAID ACT.
THE WAREHOUSING (DEVELOPMENT & REGULATION)
ACT, 2007
SALIANT FEATURES

 REGISTRATION OF WAREHOUSES AND ACCREDITATION AGENCIES.

 LIABILITIES, DUTIES AND LIEN OF WAREHOUSE MAN

 FORMAT OF WAREHOUSE RECEIPT

 CONDITIONS FOR NEGOTIABILITY OF WAREHOUSE RECEIPT BY DELIVERY AND

ENDORSEMENT.
 THE WAREHOUSING DEVELOPMENT AND REGULATORY AUTHORITY (WDRA)

 WAREHOUSING ADVISORY COMMITT

 OFFENCES AND PENALTIES
 WAREHOUSE RECIEPT

 MAY BE EITHER IN WRITING OR IN ELETRONIC FORM

 SHALL BE A DOCUMENT OF TITLE TO GOODS IN WRITING IF IT CONTAINS ALL THE FOLLOWING
PARTICULARS, NAMELY:

 WAREHOUSE RECIEPT(WR) NUMBER

 WAREHOUSE REGISRATION NUMBER & DATE OF VALIDITY

 NAME OF WAREHOUSE & POSTAL ADDRESS

 NAME & ADDRESS OF DEPOSITOR

 DATE OF ISSUE OF WR

 STATEMENT THAT THE GOOD RECEIVED SHALL BE DELIVERED TO THE HOLDER OR TO THE
ORDER OF A NAMED PERSON
 RATES OF STORAGE & HANDLING CHARGES

Cont…
 WAREHOUSE RECIEPT

 DESCRIPTION OF GOODS, QUANTITY & QUALITY OR GRADE

 MARKET VALUE AT THE TIME OF DEPOSIT

 PRIVATE MARKS OF DEPOSITOR ON THE GOODS OR PACKAGES

 NAME OF INSURANCE COMPANY

 WHETHER WR IS NEGOTIABLE OR NON NEGOTIABLE

 DATE & SIGNATURE OF THE WAREHOUSE MAN OR HIS AUTHORIZED AGENT

 DECLARED SHELF LIFE OF GOODS

 THAT THE RECIEPT WOULD BE VALID TILL THE EXPIRY OF DECLARED SHELF LIFE
SAMPLE CWC WAREHOUSE RECEIPT  
 WAREHOUSE RECEIPT SYSTEM

FARMER, EXPORTER,
TRADER, PROCESSOR

PLEDGING WITH BANKS / WAREHOUSE

FINANCIAL INSTITUTIONS

INSPECTION,GRADING,
INSURANCE
WAREHOUSE RECEIPT
 REGULATION OF WAREHOUSING BUSINESS

NO PERSON SHALL COMMENCE OR CARRY ON THE WAREHOUSING

BUSINESS BY ISSUING NEGOTIABLE WAREHOUSE RECEIPT UNLESS HE
HAS OBTAINED A REGISTRATION CERTIFICATE IN RESPECT OF THE
CONCERNED WAREHOUSE OR WAREHOUSES GRANTED BY THE
AUTHORITY UNDER THIS ACT.
THE WDRA MAY NOT GRANT A CERTIFICATE OF REGISTRATION UNLESS
IT IS SATISFIED THAT THE WAREOUSE IN RESPECT OF WHICH THE
APPLICATION HAS BEEN MADE HAS ADEQUATE FACILITIES AND
SAFEGUARDS REQUIRED TO WAREHOUSE THE GOODS BESIDES
SATISFYING FINANCIAL, MANAGERIAL AND OTHER ELIGIBILITY
CRITERION.
 IMPACT OF THE ACT ON AGRI BUSINESS

THE WAREHOUSING (DEVELOPMENT AND REGULATION ) ACT 2007

WILL HAVE FOLLOWING IMPACTS ON AGRI-BUSINESS
– CUSTOMERS WOULD BE ENCOURAGED TO STORE THEIR
PRODUCE IN REGISTERED WAREHOUSES.

– GRADING AND QUALITY STANDARDS OF AGRICULTURE

COMMODITIES WOULD BE ENCOURAGED.

– BETTER RETURN OF THEIR PRODUCE WILL BE ASSURED.

– THERE WILL BE DEMAND FOR SCIENTIFIC WAREHOUSES IN

RURAL AREAS
 FARMERS

WAREHOUSE MAN
GOVERNMENT
BENEFITS
FROM WDRA TO
STACKHOLDERS

TRADERS/IMPORTERS/ INSURER
EXPORTERS

LENDER
 OPPORTUNITY – AGRI BUSINESS

FARMERS
 AVAILABILITY OF BETTER STORAGE INFRASTRUCTURE &
STANDARDIZED STORAGE CHARGES.

 EASY ACCESSIBILITY TO FINANCEAND ENHANCED LIQUIDITY.

 LOWER COSTS OF FINANCINGAS ARESULT OF REDUCED RISK.

 WILL FACILITATE TRADE IN COMMODITIES WITHOUT PHYSICAL

HANDLING OF THE STOCKS. EASE OF SELLING OF AGRI PRODUCE.
 OPPORTUNITY AGRI BUSINESS
 .

 INCREASED NET WORK OF WAREHOUSES/ DELIERY CENTRES

 INCREASE CONFIDENCE DUE TO WELL LAID ACCOUNTABILITY.

 SAEGUAD AGAINST CHEATING ON WEIGHT AND QUALITY.

 TRADING ON WARHOUSE RECEIPT SYSTEM SHORTENS THE MARKET

CHAIN AND SUBSTANTIALLY INCREASE THE PRODUCER MAGIN.

 REDUCTION IN STORAGE LOSSES.

 OPPORTUNITY – AGRI BUSINESS

WAREHOUSE MAN

 TO BENCHMARK THEIR INFRASTRUCTURE & QUALITY OF

SERVICES AGAINST THE BEST IN THE WORLD

 INCREASED BUSINESS OPPORTUNITIES FROM STAKE HOLDERS

 REGULATORY DEFINED RIGHTS , ROLES & RESPONSIBILITIES

 OPPORTUNITY – AGRI BUSINESS
FINANCIAL INSTITUTIONS & INSURANCE
COMPANIES

 ASSURANCE OF DEALING WITH ACCREDITED

WAREHOUSES
 ASSURANCE OF DELIVERY OF THE QUALITY &
QUANTITY AS MENTIONED IN THE WR .
 LOWER ‘ RE-INSURANCE’ PREMIUMS AS DEALING
WITH ACCREDITED WAREHOUSES
 ASSURANCE AGAINST RISKS OF THEFT, PILFERAGE,
QUALITY & QUANTITY LOSSES, ETC.
 FASTER DISPOSAL OF INSURANCE CLAIMS
 BENEFITS TO TRADERS

 ACCESS TO MARKETS.
 LOW TRANSACTIONS COST.
 HIGHER PROFITS.
 NO EXTRA COST INVOLVED IN LOGISTICS, WAREHOUSING AND
HANDLING.
 NO SERVICE LOCATION LIMITATION.
 NO EXTRA COST INVOLVED IN RISK PERCEPTION.
 BENEFIT TO LENDERS

 REDUCE RISK.

 REDUCE COST OF LENDING.

 NO SERVICE LOCATION LIMITATIONS.

 ASSURANCE OF QUALITY AND QUANTITY TO EASE

THE FUNDING PROCESS.

 EASY DISPOSAL.
 BENEFITS TO GOVERNMENTS

 ASSURED QUANTITY AND QUALITY OF BUFFER

STOCK.

 COST SERVING – REDUCED PROCUREMENT AND

DISTRIBUTION COSTS.

 TO CARRY LESS INVENTORIES OF THE

AGRICULTURAL PRODUCE.

 EFFICIENT OPERATIONS.
FACILITATION OF FOOD SECURITY

 GOOD INFRASTRUCTURAL WAREHOUSING

FACILITY.

 APPROPRIATE LEGAL MECHANISM LIKE

WAREHOUSE RECEIPT.

 PROVISION OF MARKETING PLATEFORM.

 EFFICIENT LINKAGES BETWEEN PRODUCER

AND MARKET.
WAREHOUSE RECEIPT SYSTEM AND FOOD SECURITY

•A WAREHOUSE RECEIPT SYSTEM PROVIDES A WAY TO REDUCE

GRADULLY THE ROLE OF GOVERNMENT AGENCIES IN
AGRICULTURAL COMMERCIALISATION.

•GOVERNMENT INTERVENE IN AGRICULTURAL MARKETS TO :-

SUPPORT PRICES, BY BUYING DIRECTLY FROM PRODUCERS

AND,
GUARANTEE A MEASURE OF FOOD SECURITY.
TO SUPPORT PRICES, GOVERNMENTS CAN ACCEPT
WAREHOUSES RECEIPTS WHEN PRICES DROP BELOW A
SUPPORT FLOOR, RATHER THAN TAKING DELIVERY OF
PHYSICAL INVENTORIS.

•SINCE WAREHOUSE RECEIPTS GUARANTEE THE EXISTANCE OF

STOCKS, GOVERNMENTS CAN ACHIEVE THEIR FOOD
SECURITHY OBJECTIVES BY MERELY HOLDING THESE
RECEIPTS.
 HEDGING WITH WAREHOUSE
RECEIPT
•WAREHOUSE REEIPTS CAN BE COMBINED WITH PRICE-HEDGING
INSTRUMENTS AS A COLLATERAL SECURITY.

•A SECURE WHR MAY ALLOW OWNERS OF INENTORIES TO BORROW

ABROAD AGAINST EXPORT COMMODITY IN CURRENCIES FOR WHICH
REAL INTEREST RATES ARE LOWER, THEREBY HEDGING AGAINST THE
FOREIGN EXCHANGE RISK OF FOREIGN BORROWING.

•THIS PRACTICE IS FOLLOWED IN KENYA AND UGENDA, WHERE

COFFEE STOCKS ARE OFTEN FINANCED IN POUNDS STERLING.

•THE PTA BANK IN KENYA FINANCES COFFEE EXPORTERS BY TAKING

THEIR WAREHOUSE RECEIPTS AS COLLATERAL AND ALSO OFFERS
THEM AND PUT OPTION, PURCHASED AT THE LONDON COMMODITY
EXCHANGE THAT GUARANTEESS SELLERS A MINIMUM PRICE FOR THE
COFFEE THEY HAVE IN STORAGE.
 CHALLENGES
 TIMELY ACCREDITATION OF VAST WAREHOUSING NETWORK
 REQUIREMENT OF HIGH QUALITY MANPOWER TO ROLL OUT
PROCESSES AND MEET COMMITMENTS
 ENSURING SMOOTH PERIODIC AUDITS AND IMPLEMENTATION
OF REQUIRED WAREHOUSING STANDARDS ON PAN INDIA
BASIS
 CREATING SCIENTIFIC STORAGE STRUCTURES
 DEVELOPING STANDARDS/GRADE SPECIFICATIONS FOR ALL
AGRICULTURAL COMMODITIES
 DEVELOPING EXPERTISE IN GRADING OF COMMODITIES
 WAY FORWARD
STRENGTHENING WAREHOUSE RECEIPT SYSTEM.

PROMOTE PRIVATE PARTICIPATION IN WAREHOUSING SECTOR.

HEALTHY CO EXISTANCE OF PUBLIC AND PRIVATE SECTOR IN

CREATING WAREHOUSING FACILITIES.

COMPETITIVE ATMOSPHERE TO BUILD UP EFFICIENCY .

STRENGTHEN FUTURE TRADING.