States to set their own framework for trading on national APMC

While norms to be standard for all states, taxes and issuances of trading licenses may vary

Unlike the standard trading model, the proposed countrywide electronic spot agricultural produce trading platform, National Agriculture Market (NAM), plans to adopt a framework customised for each state. Existing futures and spot trading platforms have developed a countrywide model, irrespective of trading and delivery place. Their trading norms are determined by type of commodities.

NAM, also termed National e-Market, says it is working on strategies to suit the need of every state. “NAM is a flexible framework and not a rigid, pre-fixed model. It can be customised by each state to accommodate its needs.  Trading norms will be standard across the country but there will be flexibility on things like varying norms for issue of trader licences, reporting, etc,” said Pravesh Sharma, managing director, Small Farmers’ Agribusiness Consortium (SFAC), department of agriculture, Government of India.
 

NEW MARKETS

• National e-Market to remain flexible on states
• Standard norms for traders, states might get liberty in fixing local taxes
• States to issue trading licences, seek periodical reporting
• Delivery centre to decide levies, other issues, if any

Early this month, the Cabinet Committee on Economic Affairs, chaired by Prime Minister Narendra Modi, decided to appoint SFAC as lead agency for development of a national e-market. With an outlay of Rs 200 crore, SFAC is to modernise 585 mandis (wholesale markets) in three years, linking these, to allow sale of produce without involving middlemen.

“I suppose each states would have their own laws about participation on this platform in terms of taxes, issuance of trading licence, etc,” said Madan Sabnavis, chief economist, CARE Ratings.

Apart from farmers, local traders can bid for the produce, as also traders on the electronic platform from other states. Agriculture being a state subject, SFAC is required take states into confidence to link producers and traders in their boundaries. The farmer may chose to accept either the local offer or the online offer. In either case, the transaction will be on the books of the local mandi and will continue to earn a transaction fee. The volume of business will significantly increase, as there will be greater competition for specific produce, resulting in higher transaction fees for the mandi, Sharma added.

SFAC is in the process of identifying a strategic partner for developing the auction platform and trading guidelines. This process is likely to take another three months. The national e-market is likely to start functioning by December-end.