New Delhi, May 21 On paper, it is a Government-to-Government deal entered mainly with a view to secure diplomatic goodwill. But in reality, it works out to any other commercial transaction between private parties.
On May 6, the Commerce Ministry, through a notification by the Directorate General of Foreign Trade (DGFT), allowed export of 10 lakh tonnes (lt) of non-basmati rice to 21 African countries. Similar notifications
This is not the first time a relaxation to the general ban on non-basmati shipments – in place since October 15, 2007 – was being granted. The DGFT had in the past, too, issued similar exemption notifications. For example, on March 26, 2008, export of 40,000 tonnes was permitted to the Republic of Sierra Leone, while 55,000 tonnes was likewise allocated among Nigeria, Senegal, Ghana and Cameron on October 13.
In all these cases, including the latest one, the notifications clearly specified that the exports were to be carried out through designated public sector undertakings (PSU), namely STC, PEC and MMTC. The May 6 notification stated: “The above quantity shall be exported by PSUs.” Actual buyer
But documents available with Business Line suggest something quite different.
In one particular commercial invoice, dated April 2, 2008, the exporter concerned was a PSU, PEC Ltd. The invoice simultaneously referred to a third party, which happened to be a Delhi-based private trading firm. On the other side, while the consignee was the Ministry of Trade and Industry, Government of Sierra Leone, the actual buyer was a commodity trader based in Switzerland.
A more recent case involved the Minister of Foreign Affairs and International Cooperation of a certain African country, formally seeking “to buy from the Government of India 30,000 tonnes of Indian white rice for immediate shipment”. What is more, the official letter, dated March 31, 2009, requested that the concession to export/ship the rice be given to a particular Delhi-based trader, “as they have the past experience to do so”.
When asked about this seemingly anomalous arrangement, a top Commerce Ministry official said it was an accepted practice for parastatals to subcontract transactions to private parties. In this instance, since there was a ban on non-basmati exports from the country, it was necessary to route all shipments (exempted from the ban) through PSUs.
“The PSUs are essentially routing agents through whom we can monitor the quantities being shipped. Whether they export directly or through private traders and whether the LCs and payments come from Switzerland or Africa does not really concern us”, the official informed.GEO-POLITICAL decision
“Any decision to lift export restrictions to any particular country is a geo-political call taken by the Ministry of External Affairs. Once they decide, the DGFT issues the notification and the export license”, he added.
But there are others who feel that a better way to gain diplomatic goodwill would be to offer rice from the Food Corporation of India’s (FCI) stocks either free or at a concessional rate. Current prices
Currently, white rice with 25 per cent brokens from Thailand is quoting at around $ 440 a tonne, free-on-board. As against this, it will not cost more than Rs 17,000 or $ 360 a tonne to ship out rice from Indian ports. “The export ban by India is helping keep global prices high. At the same time, by selectively allowing exports through so-called diplomatic channels, you are enabling a few firms to derivate arbitrage benefits,” industry sources said.
Incidentally, the Empowered Group of Ministers had, on March 5, considered a proposal for lifting the ban on non-basmati rice exports. The decision was, however, deferred and, instead, what got approved was the export of 20 lt to Africa through the government-to-government route. (Hindu)
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