Procurement of food grains is the new sector where outsourcing is soon going to get a foothold.

The Indian government is planning to rope in private sector companies for procurement of food grains.

It is for the first time that the government is chalking out private participation in food grains procurement. Till now, the task has been handled by the Food Corp of India (FCI).

FCI chairman and managing director Alok Sinha said that the Corporation's staff strength has been reduced by 50 in an attempt to make it lean. "We are looking at outsourcing food grains procument to private players. We hope companies will apply for paddy procurement which will commence later in the year," Sinha told reporters.

He said the Food Ministry will soon issue guidelines for the procurement of food grains by private companies for Central pool.

Earlier, government had involved private and cooperative sector players in grains procurement on a case-to-case basis.

As per the new plan, companies as well as state agencies that qualify will be entitled to a commission of 2.5 per cent of the minimum support price.

Only those companies or organizations which have over 51 per cent equity in the central government, banks or financial institutions will be invited for the task, officials said.

The companies that want to take up the outsourcing job from FCI should be in agriculture-related business and should have at least 100 employees strength. The paid-up capital of such companies at the end of the last fiscal year should have been more than Rs 5 crore (Rs 50 million).

Ministry officials, meanwhile, maintain the guidelines will not to be altered. "We don't want hordes of private companies getting into the government's procurement business and later establishing a parallel private business using this experience," a senior official pointed out.

He added that already two players--the National Collateral Management Services Ltd (NCMSL) and National Agricultural Cooperative Marketing Federation of India (Nafed)--have qualified for the outsourcing job.

Established players like ITC Holdings Ltd and Cargill Inc are also expected to participate in procurement of foodgrains.

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