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Sharad Mistry
MUMBAI: Unctad representative, Lamon Rutten, spoke to The Financial Express on various issues relating to setting up the warehouse receipt system in the country. Rutten says, the system can help drastically cut down transaction costs. Excerpts:
On current state of warehouses in the country
There are warehouses in the country, but it seems that the subject is being taken out of the cupboard after more than four decades. It needs dusting and restructuring. Only then the existing warehouses could become acceptable in current and emerging times.
On who can set up and authorise setting up of warehouses
Warehouses in order to be creditable, could be set up by commodity exchanges, industry associations, or even independent entities. World over there are over 10 leading names in warehouse businesses, three of which are active in India (including SGS of Geneva). However, these warehouses have to be authorised either by the government or the government could delegate its authority to someprivate body.
On requisites of a creditable warehouse
The owners of the existing warehouses cannot issue receipts against which finance can be raised, nor even can these be traded. The ownership of warehouse has to be separated, and accordingly the Food Corporation of India's warehouse, for example cannot issue trade-worthy WRs. The warehouses need to be professionally managed and have to be sufficiently funded. These warehouses need to have scientifically accepted grading system with periodic check ups of the goods stored in the warehouses. Investments in information technology will be one of the major factors.
The storage controls, if prevailing, makes difficult the financing (by banks) of receipts issued by warehouses. Lastly, in order to bring Indian warehouses to international levels, it is necessary that these warehouses have US-dollar denominated insurance of goods stored in the registered warehouses.
On the unwillingness to grade goods affecting the WR system
In commoditiestrade, unwillingness to grade goods is totally unacceptable. It is important to mention the quality of goods stored in the warehouse on the WR that can be both funded and traded. Gradation helps improve the overall productivity and share of all those connected with the production and trade of the commodity. To put is simply, I'll prefer to have five per cent of $100 million than have 10 per cent of $10,000.
Copyright © 1999 Indian Express Newspapers (Bombay) Ltd.
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This story was printed from Net Express located at http://www.expressindia.com. Net Express provides a portal to India, with news from The Indian Express and The Financial Express along with sites on travel and tourism, the entertainment industry, the power sector, the environment and much more.
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