Under the terms of the MoU, FCI would carry out its procurement and sale of food grains from co-operative societies all over India with the help of NCDEX. This is to achieve FCI’s policy of decentralized procurement. NCDEX is to act as a facilitator to carry out the procurement through its associate company National Collateral Management Services Limited (NCMSL). NCMSL, co-promoted by IFFCO, NCDEX & banks, is engaged in providing warehousing arrangements, quality testing, gradation, assessment etc for commodities and inventories and other services related to the commodity markets.
FCI could also decide to make use of NCDEX’s trading platform for procurement and sale of food grains and the two would work together and devise modalities for designing such contracts. FCI would work with NCDEX to promote online trading in foodgrains (both spot and futures) on mutually agreed terms. FCI would also share their warehousing space with NCDEX. Further, FCI has agreed to make available its testing laboratories to NCDEX and NCMSL while it expects to use the services of NCMSL for third party audit of stocks and operations facilities of FCI.
Speaking on the occasion, Mr V.K. Malhotra, Chairman, Food Corporation of India said,” We are continuously trying to improve our working processes and this partnership with NCDEX and NCMSL will enable us to pool in our complementary skills and services. We would also be sending some of our officials for training/deputation to NCDEX/NCMSL to enhance our understanding of commodities trading which can be used to improve our own operations”.
Mr P.H. Ravikumar, Managing Director & CEO, NCDEX said,”This MoU would lead to the creation of synergies between FCI and NCDEX. FCI is involved with probably the largest ever operation in food grains procurement in Asia while NCDEX is in the process of building a solid infrastructure for trading in commodities. The MoU bridges the logistics requirements in the present scenario. NCDEX already has nearly 100 accredited warehouses and this would add to our strength”.
“Working with FCI would also help NCDEX to align its operations with national objectives and assist in improving efficiency in the food procurement process in the medium run”, added Mr Ravikumar.
Mr. A. Hari Prasad, MD & CEO NCMSL said “Our understanding with FCI will enable us to provide solutions in the areas of storage, inspection and verification, testing and certification as well as procurement; apart from electronic on-line accounting of the commodities. NCMSL’s abilities to mitigate risks for commodity stakeholders would be made available to FCI across the country and should result in adequate savings even after accounting for the cost of such services.”
“Availing of such services would enable FCI to ultimately benchmark its services to market related efficiencies and result in lesser burden on the exchequer”
FCI is in the business of purchase, procurement, storage, distribution and sale of food grains all across the country. NCDEX is a premier national level multi-commodity online commodity exchange promoted by national level institutions. NCDEX provides for futures trading in 34 commodities through over 6000 terminals in over 440 centres in the country. NCDEX has brought about several innovations in futures trading including polling of spot prices and holding of commodity balances in electronic form.
