If wheat exporters present back-dated LCs, the DGFT will refer the case to the CBI.

  • May 31, 2022, noon

The directorate general of foreign trade (DGFT) on Monday warned wheat exporters that it would examine cases for referral to the Central Bureau of Investigation (CBI) and the Economic Offense Wing (EOW) if they are found to be using back-dated letters of credit (LCs) to illegally get permits for outbound shipment of the grain.

While prohibiting wheat exports on May 13 to control spiraling prices, the government had made it clear that supplies that were backed by LCs issued before the ban was announced would be allowed. 

Before referring to the CBI, the DGFT will take action under the Foreign Trade (D&R) Act against unscrupulous elements. It also established a two-step approval process for issuing export permits and decided to undertake physical verification of all approved LCs.

FE had last week reported that exporters had submitted LCs to seek permits for despatch of over one million tonnes of wheat, way above the initial trade estimate of just about 400,000 tonnes, leading to suspicions of attempts by unscrupulous elements to abuse the LC route. Another source said the closer scrutiny also indicates the government is in no hurry to relax the export ban.

"In order to plug the loopholes, it has been decided that regional authorities will do a physical verification of all LCs, whether already approved or under process, and that, if necessary, the help of a professional agency may be taken." "While doing physical verification, validation/endorsement by recipient banks may be ensured," the DGFT said in a trade notice.

Apart from allowing exports that were already backed by LCs, officials have stressed that India would also cater to the genuine needs of neighbouring countries and food-deficit nations through government-to-government deals and honour supply commitments already made.

Subsequently, the commerce ministry partially eased the order and permitted despatch of wheat consignments that were either handed over to the customs authorities for examination or registered in their systems by May 13. This relaxation alone was estimated to facilitate clearance of about 350,000 lakh tonnes of wheat, on top of the initial expectation of LC-backed exports of another 4 lakh tonnes. This will still be about a third of the estimated 2–2.2 million tonnes currently at various ports or in transit. Before the ban was slapped on May 13, about two million tonnes of wheat were already exported this fiscal.

Author : Rajdhani Delhi Representative

Rajdhani delhi representative

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