BackWheat export: Commerce Ministry tightens norms to prevent fraudulent practices
The Commerce Ministry tightens norms to check wheat export by traders through improper documents.
PremiumOn May 30, the Commerce Ministry tightened norms for obtaining registration certificates for wheat export in order to prevent fraudulent practices, such as the submission of false documents by shady traders. The Directorate General of Foreign Trade (DGFT) published guidelines to all of its regional authorities (RAs) on May 19, requiring rigorous adherence before issuing Registration Certificates (RCs) to qualifying exporters. The DGFT is issuing these instructions after receiving information from sources that some unscrupulous exporters are submitting false back dated L/Cs with dates of issuance on or before May 13, 2022, for issuance of RCs.
Wheat exports for which irrevocable letters of credit (LoC) were issued on or before May 13, when the export ban on the food grain was enacted, are being allowed by the government.
The DGFT stated in a trade notice that, despite these processes and the due diligence conducted by RAs in the process, it was suspected that certain wheat exporters are applying for RCs based on "improper documents," and that extra checks should be added to the system.
"In order to plug the loopholes, it has been decided that RAs will do a physical verification of all L/Cs, whether already approved or under process and for that if necessary, help of a professional agency may be taken. While doing physical verification, validation/endorsement of recipient banks may be ensured," it said.
To get registration of contracts (RC) to ship their consignments, wheat exporters must submit the message exchange date to foreign banks along with a valid irrevocable letter of credit (L/C) issued on or before May 13.
Further in cases where the L/C date is prior to May 13, but the swift message exchange date between the Indian and foreign banks is after May 13, the directorate suggested the RAs conduct full investigation (if required, through external experts).
"And if these are found to be ante-dated, immediately proceedings under Foreign Trade (Development and Regulation) Act, 1992 needs to be initiated against the exporter," it said adding such cases will be further examined for referring to enforcement agencies like Economic Offence Wing pr Central Bureau of Investigation.
If any banker is found to be complicit in cases where ante-dating has been established, legal action will be taken.
"Henceforth all RC applications found eligible for approval after physical verification of the LCs by the RAs, would be sent to a two-member committee of additional DGFTs constituted in DGFT (headquarters) for further checking and approval," it said.
The concerned RA would only give an RC to the wheat exporter after this committee's approval, according to the notice.
"RAs are requested to process all such applications with due diligence and in compliance with the instructions," it said.
(With PTI inputs)
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