VISHNU TIWARI

NEED FOR DEVELOPMENT OF

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
WAREHOUSING IN PUBLIC SECTOR.
 NEED FOR DEVELOPMENT OF
LICENSED WAREHOUSING
• AS WAREHOUSING NEEDS HUGE CAPITAL
INVESTMENT WITH LOW RETURNS PUBLIC
SECTOR WAS INEVITABLE
• AGRICULTURAL PRODUCE (DEVELOPMENT &
WAREHOUSING CORPORATION) ACT, 1956 WAS
PASSED AND LATER ON REPEALED AND
REPLACED BY WAREHOUSING COPORATION ACT,
1962 FOR CREATION OF WAREHOUSING.
• CENTRAL & STATE WAREHOUSING
CORPORATIONS (CWC & SWCs) WERE
ESTABLISHED UNDER THIS ACT.
 LICENSING OF WAREHOUSES FOR SOUND
WAREHOUSE RECEIPT SYSTEM

• THE STATES ENACTED UNIFORM WAREHOUSE

ACTS & RULES DURING 1956 – 1960 FOR
SUPERVISION AND REGULATION OF
WAREHOUSING OPERATIONS.

• IT PROVIDES FOR SOUND AND RELIABLE

WAREHOUSE RECEIPT SYSTEM AT PAR WITH
DEVELOPED ECONOMIES.
 WAREHOUSING

 AN ECONOMIC ACTIVITY
 CONCOMITANT TO AGRICULTURE
 CLOSELY LINKED WITH AGRO
INDUSTRIAL DEVELOPMENT & TRADE
 WAREHOUSING INFRASTRUCTURE
(CAPACITY IN MILLION TONNNES A ON 01-07-2005)

DISCRIPTION CWC SWC TOTAL

TOTAL NO. OF 498 1599 2097

WAREHOUSE

CAPACITY 10.42 14.55 24.97

CAPACITY 10.42 14.55 24.97

1MT=6Sq.FT
 SERVICES OFFERED BY CWC
• SCIENTIFIC STORAGE FACILITIES FOR MORE
THAN 400 COMMODITIES.
• MARKETING FACILITIES (HANDLING &
TRANSPORTATION THROUGH OUTSOURCING)
• CUSTOM BONDED WAREHOUSES.
• CONTAINER FREIGHT STATIONS AND INLAND
CLEARENCE DEPOTS.
• AIR CARGO COMPLEXES.
• PEST CONTROL SERVICES.
 WHAT IS WAREHOUSE RECEIPT(WR)

AS PER STATE WAREHOUSES ACT, WR

MEANS A “RECEIPT” IN THE PRESCRIBED
FORM ISSUED BY A LICENCED WAREHOUSE
MAN TO A PERSON DEPOSITING GOODS IN
THE WAREHOUSE
 WAREHOUSE RECEIPTS
A TOOL FOR :
 SOFTENING THE RIGIDITY INVOLVED IN
HANDLING COMMODITIES

 BETTER CREDIT DELIVERY.

 BETTER LOAN RECOVERY FOR FINANCIAL

INSTITUTIONS.

 CONVENIENCE IN ASSET MANAGEMENT.

 MARKET INSTRUMENT FOR DEVELOPING

INDIAN ECONOMY.
SOUND & RELIANCE WAREHOUSE
RECEIPT SYSTEM

 WAREHOUSE RECEIPT SYSTEM CAN

PLAY SIGNIFICANT ROLE IN
REDUCING THE PRESSURE ON THE
GOVT. TO CARRY LARGE INVENTORY
OF THE AGRICULTURAL PRODUCE.
 WAREHOUSEMAN’S LIABILITY

 IT IS THE LIABILITY OF THE WAREHOUSEMAN

TO RETURN ON DEMAND OR SURRENDER OF
THE WR, THE GOODS OF THE SAME QUALITY
AND QUANTITY (SUBJECT TO NATURAL LOSS
DURING STORAGE DUE TO SHRINKAGE ETC.)
WHICH WERE TENDERED FOR STORAGE BY
THE DEPOSITOR.
WORKING OF WAREHOUSE RECEIPT SYSTEM

WAREHOUSE
INSPECTION
RECEIPT
GRADING
INSURANCE

PLEDGING

WAREHOUSE

BANKING/FINANCIAL
INSTITUTION

PRODUCER
EXPORTER
PROCESSOR
 TRANSFERABILITY OF WAREHOUSE RECEIPT
 STATE WAREHOUSE ACTS PROVIDE
“NEGOTIABLE / NON-NEGOTIABLE” IN THE
PRESCRIBED FORM OF WAREHOUSE RECEIPT.
 THE STATE WAREHOUSES ACTS ALSO PROVIDE
THAT UNLESS OTHERWISE SPECIFIED IN THE WR, A
RECEIPT ISSUED BY WH MAN IS TRANSFERABLE
BY ENDORSEMENT AND SHALL MAKE ITS LAWFUL
HOLDER TO RECEIVE THE GOODS SPECIFIED IN IT,
ON THE SAME TERMS AND CONDITIONS, ON WHICH
THE PERSON WHO ORIGINALLY DEPOSITED THE
GOODS, WOULD HAVE BEEN ENTITLED TO RECEIVE
THEM.
CONTD./--
 WR IS A DOCUMENT OF TITLE TO GOODS AS PER
THE SALE OF GOODS ACT, 1930.
 THE GOODS COVERED BY A NEGOTIABLE
WAREHOUSE RECEIPT CAN BE TRANSFERRED BY
ENDORSEMENT ON THE WR AND ITS DELIVERY TO
THE ENDORSEE.
 A PERSON TO WHOM WAREHOUSE RECEIPT IS
NEGOTIATED, ACQUIRES A TITLE TO THE
WAREHOUSE RECEIPT, THE RIGHT OF POSSESSION
OF THE GOODS COVERED BY THE WAREHOUSE
RECEIPT AND THE RIGHT TO REQUIRE THE
WAREHOUSE MAN TO HOLD OR DELIVER THE
GOODS ACCORDING TO THE TERMS OF
WAREHOUSE RECEIPT.
CONTD./--
 HENCE, THE WR ENJOYS THE ADVANTAGE OF
NEGOTIABLE INSTRUMENT.
 BUT AS PER NEGOTIABLE INSTRUMENT ACT,
1881, WAREHOUSE RECEIPT IS NOT A
NEGOTIABLE INSTRUMENT.
 WHEREAS RAILWAY RECEIPT, LORRY RECEIPT,
BILL OF LADING THOUGH NEGOTIABLE BY
ENDORSEMENT ARE ALSO NOT NEGOTIABLE
INSTRUMENTS AS PER N.I.ACT, 1881.
 ALL THESE INSTRUMENTS ARE ACCEPTED BY
COMMERCIAL BANKS AS COLLARAL / SECURITY
AGAINST GOODS COVERED BY THEM.
 WAREHOUSING COMPANIES AS
INDEPENDENT AGENTS
 THE LEGISLATIONS PROVIDE THAT NO
WAREHOUSING ENTITY WILL TRADE IN GOODS
TO AVOID CONFLICT OF INTEREST.
 THE STATE WAREHOUSE ACTS ALSO PROVIDE
LICENSING OF SAMPLERS, GRADERS AND
WEIGHERS.
 IN PRESENT TIMES THE WAREHOUSING
ENTITIES NEED TO BE ADEQUATELY
CAPITALISED AND PROFESSIONALLY
MANAGED.
 WAREHOUSING COMPANIES AS
INDEPENDENT AGENTS

 EVERY WAREHOUSEMAN RESPONSIBLE FOR

ALL NECESSARY PRECAUTIONS FOR
SCIENTIFIC STORAGE.
 EVERY WAREHOUSEMAN RESPONSIBLE TO
TAKE INSURANCE OF THE GOODS STORED
WITH HIM.
 WAREHOUSEMAN CAN NOT LEND MONEY
AGAINST GOODS IN WAREHOUSE.
 WAREHOUSING COMPANIES AS
INDEPENDENT AGENTS
 THE INSPECTION, SAMPLING, WEIGHMENT AND
GRADING BY A LICENCED WAREHOUSING
COMPANY ARE MORE DEPENDABLE THAN
COLLATERAL MANAGERS AS OUTSIDERS.
 THE NEXT GENERATION IN WAREHOUSE
RECEIPTS TO BE THE WAREHOUSE WARRANTS
WHICH CAN BE MORE SOFTLY TRADED THAN
NEGOTIABLE WAREHOUSE RECEIPTS.
 THE GENERAL CONDITIONS FOR OPERATION OF
WAREHOUSE WARRANTS CAN BRING VALUE
ADDITION IN WAREHOUSING ACTIVITY.
 ADVANTAGES OF WAREHOUSE
RECEIPT SYSTEM
 PROVIDES FINANCIAL FLEXIBILITY TO
FARMERS/ PROCESSORS /TRADERS.
 SAVES FARMERS FROM DISTRESS SALES
DURING CROP SEASON.
 ENHANCES VOLUME OF BUSINESS AND
PRODUCTIVITY.
 REDUCES SEASONAL PRICE VARIATIONS.
 IMPROVES EFFICIENCY OF MARKETING
SYSTEM.
NEGOTIABILITY OF THE WAREHOUSE
RECEIPTS IS TO BE USED FOR TRADING, OR
ACCEPTED FOR DELIVERY AGAINST A
DERIVATIVE INSTRUMENT SUCH AS FUTURE
CONTRACT.

COMMODITY EXCHANGES NEED TO BE

DEVELOPED AS THE MARKET PLACE FOR
TRADE IN WAREHOUSE RECEIPT.

HOW ?
 TRADE IN PHYSICAL SAMPLES

ISSUE OF GRADING CERTIFICATE (GC)

ACCREDIT INDEPENDENT & CREDIBLE

WAREHOUSES FOR ISSUE OF GC AND WR

TRADE ON WR
 OBSTACLES IN USAGES OF
W.R. IN INDIA
 LACK OF AWARENESS AND TRAINING.

 INAPPROPRIATE TRADING PRACTICES.

 LACK OF APPROPRIATE LEGAL, REGULATORY

AND INSTITUTIONAL ENVIRONMENT TO
SUPPORT WR.

 LIMITED FAMILIARITY OF BANKING

COMMUNITY WITH WAREHOUSE RECEIPT .
 REQUIREMENT FOR TRADE IN WR

 RELIABLE AND REPUTABLE WAREHOUSE

OPERATORS WITH GOVT. REGULATION.

 APPROPRIATE WAREHOUSING AND

COMMERCIAL LEGISLATION FOR
WAREHOUSE WARRANTS AND DEMAT.
 FUTURE LEGISLATION

• NEGOTIABLE WAREHOUSE RECEIPTS BILL AS A

PART OF REFORMS IN THE FIELD OF
AGRICULTURAL MARKETING IS UNDER ACTIVE
CONSIDERATION OF GOVT. OF INDIA.

• NEW LEGISLATION TO THIS EFFECT IS LIKELY,

WHICH WILL ENHANCE THE COMPETIVENESS
OF INDIAN AGRICULTURE IN THE DOMESTIC AS
WELL AS GLOBAL MARKET.
 STRATEGIES TO BE ADOPTED BY
WAREHOUSING CORPORATIONS :

• NEED TO ADOPT MARKET -ORIENTED POLICIES

• TO WIN THE CONFIDENCE OF CUSTOMERS.

• EXPLORE NEW AVENUES WHILE CONTINUING

TO PURSUE THE BASIC OBJECTIVES OF
PROVIDING SUPPORT TO AGRICULTURAL
SECTOR AND TRANSLATE NEW EMERGING
OPPORTUNITIES INTO COMMERCIAL REALITIES.