Centre planning amendment in Warehousing Act of 2007 to help small farmers, traders & MSMEs

New Delhi: In order to help small/medium farmers, traders and MSMEs, the Centre plans to strengthen the framework governing warehousing operations and compliance by amending the Warehousing Development Regulation Act of 2007 making it mandatory for all warehouses storing ‘notified goods’ to get registered. Currently, the registration with Warehousing Development Regulatory Authority (WDRA) is optional, thereby hindering standardization and enforcement. The transition to mandatory registration will be phased to avoid disruption, said an official. An extra layer of accreditation agencies will be removed to streamline operations to provide affordable services to the small and medium farmers, traders and MSMEs. The changes also include a shift from physical warehouse receipts to electronic warehouse receipts (e-NWRs). ‘Warehouse receipt’ will now include only electronic forms which is expected to enhance efficiency and reduce paperwork. However, a transition period will be provided for warehouses to adapt to the new electronic system. The Bill aims to enhance the orderly development of the warehousing market through effective regulation by empowering the WDRA to regulate the registration and functioning of repositories and intermediaries.

Repositories will facilitate the creation and record of electronic warehouse receipts. The proposed amendments also grant additional powers to the WDRA which currently lacks penal powers beyond filing suits against defaulting warehouses. It would be empowered to notify goods for storage and issue directions to protect the interests of depositors. It can specify mechanisms for dispute resolution between warehouses and holders, and decide the compensation for damaged or lost goods. The authority would be given significant investigative powers to ensure compliance by directing investigations into any warehouseman or intermediary suspected of violations. It could examine individuals under oath and require the production of documents. It could also seize documents if there is a risk of destruction or alteration. It would be given power to enforce compliance and impose penalties as high as four times the value of goods for serious violations. Penalties can reach up to five crore rupees for fraudulent practices. Specific penalties are outlined for warehousemen and depositors who misrepresent goods or fail to deliver. To top this, it would have the power to recover monetary penalties and costs from violators effectively through measures such as attachment and sale of movable and immovable property. With defined roles in deciding and enforcing penalties, the proposed amendments limit a civil court’s jurisdiction whereby the latter cannot entertain matters or issue injunction against the authority’s order.