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Fraudulent practices by wheat exporters on govt radar

The government had on 13 May restricted wheat exports after heatwaves during the latter part of March, especially in northwest India impacted production. Photo: Ramesh Pathania/Mint  (Ramesh Pathania/Mint)Premium
The government had on 13 May restricted wheat exports after heatwaves during the latter part of March, especially in northwest India impacted production. Photo: Ramesh Pathania/Mint  (Ramesh Pathania/Mint)

To plug loopholes, DGFT has ordered physical verification of all documents to ensure strict compliance with provisions for obtaining wheat export registration certificate

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The Directorate General of Foreign Trade (DGFT) on Monday ordered physical verification of all documents to ensure strict compliance with provisions for obtaining wheat export registration certificates for orders placed before a ban on the grain came into effect. The aim is to curb fraudulent practices by wheat exporters.

DGFT has asked enforcement agencies, including the Economic Offences Wing (EOW) and the Central Bureau of Investigation (CBI), to probe fraudulent letters of credit.

Traders were taking advantage of high international wheat prices by using several unscrupulous means such as producing fake letters of credit (LCs), a commerce and industry ministry official said. Another official said that the situation at ports has become very difficult to manage as traders have been trying to flout the wheat ban.

Wheat prices soared to record levels after the disruption in exports from Russia and Ukraine. India’s wheat ban also pushed international prices of wheat higher. “To plug the loophole, it has been decided that regional authorities will do a physical verification of all letters of credit, whether already approved or under process. Wherever necessary, the help of a professional agency may be taken for such verification," the department of commerce said.

The order has been issued to ensure that the exporters are not issued registration certificates (RCs) based on improper documents, it said. According to the order, the validation or endorsement by the recipient bank has to be ensured while doing physical verification.

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