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The Essential Commodities (Amendment) Bill, 2020: Explained

calendar01 Oct, 2020
timeReading Time: 3 Minutes
The Essential Commodities (Amendment) Bill, 2020

After being promulgated on June 5, 2020, the Essential Commodities Amendment Bill, 2020 finally gets the authentication of the Rajya Sabha on Tuesday. The Bill amends the Essential Commodities Act, 1955, in which the Act confers better control to the central government over the product, supply, and propagation of certain commodities. The Ordinance seeks to improve the income of the farmers and throttle up the competition in the agriculture sector. It aims to deploy some relaxations in the regulatory system while safeguarding the interest of the consumers. 

Salient features of Essential Commodities (Amendment) Bill, 2020

Following are the highlights of the Essential Commodities (Amendment) Bill, 2020

Essential Commodities (Amendment) Bill, 2020

Read our article:An Outlook on Banking Regulation (Amendment) Bill, 2020 Passed by Lok Sabha

Trading of Agricultural Produce

The Ordinance permits the farmers to sell their product outside:-

  1. The market operated by the market committees established under the state APMC Act. 
  2. Other markets are regulated by the state APMC Act. 

Such liberalization of trade empowers the farmers to sell their products to:

  • Warehouse
  • Farm gates 
  • Silos
  • Factory premises
  • Cold storage

Incorporation of Electronic Trading

The Ordinance facilitates the electronic trading of agriculture produces prescribed under any state APMC Act in a trade area referred by the same act. Entities that can operate such a platform includes companies, LLP, or registered society having a PAN number under the IT Act, 1961[1], or any other documentation referred by the central government. Additionally, agricultural cooperative society or farmer producer companies are also permitted to perform such activities as per the Act.

Exclusion of the Market Fee 

The Ordinance dissolves the right of state government for exempting any market fee or tax on farmers, online trading platform, and traders. 

Benefits rendered by Essential Commodities (Amendment) Bill, 2020

  • Bill enables the agricultural sector to get more exposure to private investment. This will open up the possibility of considerable funding for the farmers to promote crop production. 
  • Assist consumers as well as farmers to ensure price stability.
  • The omission of the pulses, cereals, onion, potatoes, and oilseeds from the essential commodities to do away with the imposition of stock holding limits it empowers the government to overcome the extreme events like unexpected price surge, natural disaster, famine, and war. 
  • It will crank up the investment limit in cold storage, particularly for the private sector players, and prepare a roadmap for modernizing the supply chain. 
  • The omission of a limit on the stock would allow the farmers to access a larger market and it will also lure investment in transportation & infrastructure due to fewer government limitations.  

Downsides of Essential Commodities (Amendment) Bill, 2020

  • Omitting restrictions to stock commodities will lead the farmer to the devastating situation where big organizations could exploit them and may charge steep prices. 
  • The price limit set for “unexpected events” is not steep that they are never likely to come into effect.


Essential Commodities Amendment Bill, 2020 encloses some significant modifications that advocate the prosperity of the farmers and the traders. The Act aims to empower the farmers to reap those benefits that were literally out of scope from the previous bill. Though there are some downsides as well that might bother some of the farmers to a great deal.

Read our article:Lok Sabha clears the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Bill, 2020


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