Centre warns of CBI, EoW action against post-dated wheat export LCs

Serving a warning to unscrupulous wheat exporters, the government on Monday said if after a probe it was found they had issued post-dated letters of credit (LCs), they would be proceeded against under the Foreign Trade Act.

It can take help from the Central Bureau of Investigation and Economic Offences Wing on this. The government said it could take action against banks complicit with exporters in this matter.

The Directorate General of Foreign Trade (DGFT), in an order on Monday, said the regional authorities of the DGFT would take the help of external experts to investigate whether wheat exporters had issued post-dated LCs beyond May 13 for export.

Not only that, the order further said if any regional authority approved export against valid LCs, it would again send it for clearance by a two-member panel to be constituted by the New Delhi-headquartered DGFT to vet the approvals.

Since wheat export was banned on May 13, the government has been cracking down on exporters who are waiting to have their orders cleared on the basis of invalid LCs.

Traders said the matter came to light when, after a contracted amount of 4.5 million tonnes for export as on May 13 (the date of the ban), the government received LCs equivalent to over 5.5 million tonnes.

The government had allowed export against valid irrevocable LCs issued on or before May 13 as a transitional arrangement. Later, it directed exporters to get the LCs registered to ensure that only exporters with valid and genuine LCs got the nod.

However, on investigation it was found that to bypass the ban several exporters had issued post-dated LCs, on account of which the quantity of wheat contracted for export showed a higher figure than it should have had.

On the day wheat export was banned, according to official records, India had contracted to export around 4.5 million tonnes, of which 1.5 million tonnes had been shipped out by then. In 2021-22, India had exported around 7.22 million tonnes, the highest ever.