Open General License Exports Notifications Likely To Be Out By Next Weekend.

NEW DELHI: The formal notification on allowing exports of rice and wheat under OGL (open general license) is likely to be out by late next week or early the week after.

This will mean that the physical export of both cereals is likely some early October, in time for the beginning of the Kharif Marketing Season (KMS) which in bring in the fresh summer crop into the market. Curiously enough, the notifications allowing for "unrestricted" or "free" exports are only likely to facilitate around 5mt of cereals in all.

:We have already had problems earlier with the courts on specification of qunatiy ceiling under OGL exports and on specific allocation of export quantities to exporters. both wheat and rice will not be specified in the OGL notifications.

In view of that, the ceiling on exports decided for rice and wheat by the EGoM will be informal. However, we will monitor exports strictly and ensure that an informal ceiling of 2mt for wheat and 3mt for rice is adhered to," food minister K V Thomas, who is to brief prime minister Manmohan Singh later this evening on the subject, told ET. Indications are that an MEP could be imposed on rice to regulate exports once the informal ceiling of 3mt is reached.

The OGL notification from the DGFT (directorate general of foreign trade under the Commerce ministry) is unlikely to specify either the "informal" cap of 2mt for wheat but specify mandatory registration of exporters.

For rice, too, the unstated ceiling of 3 mt of exports for rice, including one million tonne of non basmati and 2mt of parboiled rice is unlikely to be specified in the notification since it would technically contradict the concept of "unrestricted" exports. The registration of exporters will allow for those who come in first to be registered for exports first, without specific allocation to individual exporters, subject to the overall informal ceiling.

The urgency to hasten isuse of notification for exports is primarily in order to reduce pressure on storage space available with the government for cereals, even while keeping a gimlet eye on the stocks available with the Centre to service PDS and welfare programmes and the right to food law which is expected to be operational in the coming financial year.

Although open market trade on cereals already exists, the additional avenue of "free" exports for both rice and wheat now created is expected to reduce the pressure on State agencies for procurement from farmers.

Under Food Corporation of India (FCI) rules, the agency has to procure all the cereals brought to it for sales by farmers..FCI, the nodal agency for foodgrains procurement and distribution, had 25.27 mt of rice and 35.87 mt of wheat (61.27 mt in all) in its storage facilities as of August 1..According to the buffer norm prescribed, the FCI should have only 21.2 mt of wheat and rice available as of October 1 every year. This includes 5 mt of strategic reserves.


"The registration of exporters could be done on first come, first registered basis until the capped quantity is exhausted," a government official said. Physical exports from ports to outside (African nations and Bangladesh in particular for non basmati rice) are expected within a month, With the DGFT already having done some groundwork regarding the issue of the notification, it s expected that speedy processing of paperwork necessary for the issue of notification will ensue immediately after the minutes of the EGoM signed by the head, (finance minister Pranab Mukherjee) is forwarded to the DGFT by early next week.

The curious decision by the EGoM on Thursday of resorting to OGL (unrestricted or free) exports with a capped quantity and to specify the need for registration by exporters appears to have been taken in order not to be caught in yet another controversy following earlier run-ins with the court in the case of both non basmati rice exports and controversy over a quantity ceiling on OGL export of cotton.

An earlier decision of the government to allow ceiling specified rice exports under OGL with specific allotments to exporters was challenged by the courts.

Source : economictimes.indiatimes.com