Warehousing sector needs a big push in Budget: NCML

Warehousing sector needs a big push in Budget: NCML New Delhi: National Collateral Management Services Ltd (NCML) has sought a big policy push in the Budget 2013-14 for building warehousing and cold chain infrastructure in the country.

It also sought service tax exemption for warehousing services and classification of all warehouse receipt financing of agriculture produce as "priority sector" lending.

"The government needs to give the right signals to investors in the warehousing and cold chain infrastructure space...The major constraint in such infrastructure projects is the lengthy payback period," NCMX Managing Director and CEO Sanjay Kaul said.

He said the industry has been demanding a special window to finance such projects at a concessional rate of interest, with a loan repayment period of at least 15 years.

Stressing that cold chain infrastructure will require the government support in a big way to make it commercially viable, Kaul said: "Existing subsidies for standalone cold stores are inadequate and do not lead to an integrated cold chain across the value chain."

He suggested that large-scale public-private partnership (PPP) projects need to be launched on a viability-gap funding (whereby government funds a significant part of the total project cost) basis to modernise the country's food chain.

Of the 32 million tonnes cold store capacity that has been created, 65 percent is for potatoes alone.
Less than 3 percent of the 250 million tonnes of fruits and vegetables have any cold chain infrastructure leading to a 15-25 percent wastage, he added.

On a NABARD scheme, Kaul said: "After the 2012 Budget speech, NABARD also announced an interest subvention and re-finance scheme through banks that lend to such warehouse infrastructure projects. Unfortunately, for reasons not known, RBI objected and the scheme stands scrapped."

"It is hoped that the Finance Minister will bring clarity on this issue in his Budget speech," he added.

Last year, the government announced a Rs 5,000 crore allocation exclusively for creation of warehousing facilities using Rural Infrastructure Development Fund (RIDF).

NCML, which is promoted by cooperatives IFFCO, HAFED and several banks, provides risk management solutions in the areas of commodity and inventories.

PTI