Rice Shipments Stand Still Despite Court Order

Mumbai: The rice export scenario is getting murkier by the day. Even court orders are reportedly not being acted upon with due dispatch. At least two exporters have obtained orders from Andhra Pradesh High Court directing that their shipments be allowed. But as of Wednesday (October 31) afternoon, their export documents had not been processed by the Customs Department, trade representatives told Business Line.

The first order obtained on October 29 was served on the Customs Commissionerate the following day; and another order obtained on October 30 was served this morning. The quantity covered by the two orders is said to be slightly less than 40,000 tonnes.

The entire rice exporting community is upset that despite court orders there is delay in processing of export documents and clearance of goods for export shipment.

Ships waiting at Kakinada port incur demurrage charges at the rate of $10,000 a day. The shipper is expected to pay the amount.

Meanwhile, a notification issued by the Ministry of Commerce clarified that the export ban would be effective from October 10 (and not October 9). As a result, and by implication, Letters of Credit (LC) established till October 9 would be a valid document to establish the pre-ban nature of export contract.

However, such tinkering with the export procedure is hardly the solution to resolve a problem that is massive and real. In simple terms, the government will have to establish the genuineness of the pre-ban contracts by stipulating practical and acceptable norms. LCs alone cannot be construed to be the single clinching evidence of a pre-ban commitment. There are other acceptable evidences such as advance payment, registration of export contract with bank for obtaining pre-shipment packing credit and so on. “It is obvious, a liberal export policy as claimed by the Government is not so liberal after all when one reads the fine print,” commented an irate trader.

Reports circulating in the grains market suggest that the Director General of Foreign Trade under the Ministry of Commerce has recommended that LCs opened till October 15, the day the ban was officially notified, should be accepted and all contracts covered by LCs opened till October 15 should be cleared for export. But this decision will have to be approved by the Cabinet, a trading house representative remarked.

Even if the date of opening LC is extended to October 15, only about 50-60 per cent of the pending commitments are likely to be covered. A significant part would still not be covered by an LC. But there surely are cases such as advance payment received against confirmed export orders, which should also be considered for export, claim some exporters. There is increasing nervousness among the rice traders about the fate of their export orders. They see an avoidable stand-off between the Finance Ministry and the Commerce Ministry that is frustrating export efforts. Many are warily gearing up to face arbitration proceedings for shipment default.