Warehouse Licence
Warehouses are commercial facilities wherein goods are stocked for further selling, seasonal protection, processing, or other reasons. The warehouses are relatively larger and have multiple zones wherein various shelves exist for the systematic storage of goods. Running a warehouse attracts several legal implications and a string of approvals, including a Fire NOC, a warehouse licence issued by the Warehousing Development and Regulatory Authority (WDRA), etc. This article sheds light on the legal aspects of opening and running a warehouse in India.
Who needs a Warehouse Licence?
The warehouse registration falls under the WDRA, 2007 and the Warehousing (Development & Regulation) Registration of Warehouse Rules, 2017. This legislation mandates obtaining a warehouse licence for those intending to render storage services and issue negotiable and non-negotiable warehouse receipts.
Understanding the Types Of Warehouses in India
The warehouse licence is categorised into six different types illustrated below:
1. Co-operative Warehouses
The cooperative warehouse is essentially used by a limited group of people, known as co-operatives. These facilities are used for mutual benefit with nil commercial intent. These warehouses can accommodate a variety of goods, including perishable items and consumer electronics.
2. Public Warehouses
Companies and individuals can use these warehouses via rental services. The sizeable area and potential to store a wide range of goods make these warehouses stand out choice for those looking for bulk storage. Some public warehouses facilitate the temperature control facility, ensuring an extended shelf life for perishable products.
Alternatively, the private warehouses are run by registered entities and hence have limited exposure to the general public. Owing to privatisation, these warehouses boast expensive resources and technologies depending on the type of product being stored.
3. Bonded Warehouses
A bonded warehouse provides storage and processing solutions for duty-free goods that may or may not undergo the manufacturing process. Such goods do not attract any customs duty. The taxes are only payable once the goods are ready to use and being dispatched to the final destination.
4. Government Warehouses
As the name implies, government warehouses are run by the government at the state or central level. Government control makes these facilities a trustworthy and safer option for those seeking storage services.
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5. Special Warehouses
Special warehouses facilitate storage solutions for entities dealing with harmful products such as acid, chemicals, paints, etc.
Underlining Legal Permits for Warehouse in India
A full-fledged warehouse requires the following approvals/permits before it goes operational:
A Warehouse license:
It is granted by the WDRA against a prescribed application and supporting paperwork, which we will discuss in the next section.
Fire NOC:
Since most warehouses are considerably sizeable and prone to fire-related accidents, the fire NOC is of paramount importance for them. It is granted by the local fire department after submitting the application and undergoing inspections.
Local body approval:
It applies to commercial warehouses that use resources to uphold in-house activities, including groundwater, manpower, electricity, and so on.
Pollution NOC:
It is required for warehouses that provide storage solutions for goods detrimental to the environment and human lives.
Eligibility criteria to apply for a warehouse license
Applying for a warehouse license requires adherence to the criteria as illustrated below:
- The applicant must be an Indian resident or a registered entity such as a private limited company, partnership firm, OPC, etc.
- A solvency certificate
- Proposal sanctioned by the board in the purview of the Special Warehouse Licensing Regulations.
- The availability of basic infrastructure to uphold the warehousing activities is mandatory.
- The facility must foster safety standards as advised by the competent authority.
Understanding document consideration for Warehouse Licence
You will be required to keep the following paperwork handy before delving into the registration process:
- Applicant’s proof of identity as required at Fifth Schedule of the Warehousing (Development and Regulation) Registration of Warehouses Rules, 2017
- Basic Data Sheet in case of cold storage
- Copy of Insurance policies as prescribed under Rule 17 of the Warehousing (Development and Regulation) Registration of Warehouses Rules, 2017. Details are available on the WDRA portal under the Documents-Circular section vide Circular dated 27.4.2017
- Document in support of net worth as required under Rule 18 (5) of the Warehousing (Development and Regulation) Registration of Warehouses Rules, 2017 and as amended on 20.03.2018
- Document to demonstrate effective control over the Warehouse, any of the following (as per the First Schedule of the Warehousing (Development and Regulation) Registration of Warehouses Rules, 2017):
- lease deed or rent agreement
- sub-lease agreement and lease deed indicating that sub-leasing is permitted revenue sharing agreement NOC from Municipal Corporation/Panchayat/local body (as the case may be) lease agreement from the concerned APMC copy of the allotment letter from the State Government
- For each warehouse listed in the application separately
- Fire Safety arrangements at the warehouse
- Identity and address proof of Authorized/Associate Authorized Representative (in case of non-individual entities)
- Lay out Plan of the warehouse(s)
- List of equipment for preservation of goods available at the warehouse
- List of equipments for assaying goods available at the warehouse
- List of equipment for weighing goods available at the warehouse (details of an internal or external lorry weighbridge is also required to be provided)
- Photograph of Authorized/Associate Authorized Representative
- Proof of technical standards under which cold storage has been constructed
- Standard Operating Procedures
- If the warehouse is owned: Copy of the Records of Rights or registered title deed in respect to land on which the warehouse concerned is located as per the Sixth Schedule of the Warehousing (Development and Regulation) Registration of Warehouses Rules, 2017
How to apply for the warehouse license?
WDRA facilitates the online registration facility for those intending to commence or perform warehouse endeavours and issues Negotiable Warehouse Receipts (NWRs).
Once you have arranged the above documents, you can visit the WDRA portal and file an e-form for warehouse registration. The e-form will prompt you to enter the various crucial details, including;
- Warehouseman identity
- Infrastructure
- Schematics of the warehouse
- Nature of goods being stored
- Manpower details
- Equipment used to lift and store the goods
- Capacity of the warehouse (in tonnes)
- Software used to track the movement of goods within the facility
The fee shall be submitted online soon after uploading the documents. The fee ranges from Rs 5000 to Rs 35000, depending on the warehouse’s storage capacity.
Notable Warehouse Regulations for the licensee
- Each licensee is liable for the proper functioning of the warehouse with utmost transparency and professionalism.
- The apt storage and management of the goods is the responsibility of the warehouse. The licensee must reimburse any damage caused to the goods owing to mishandling.
- Adequate safety measures should be implemented within the workspace to elevate safety for staff.
- The warehouse must use the negotiable and non-negotiable warehouse receipts for seamless and reliable business operation. These receipts shall serve as conclusive evidence of the receipt of goods at the warehouse.
- The entire operation should be systematically handled either via manual or electronic means.
- Documenting accounting activities is mandatory for reinforcing transparency in trade
Grounds on which Warehouse registration can be rejected
The authority can cancel the warehouse registration in the following scenarios:
- Proper safety measures have been found missing, putting workers’s lives at stake.
- The facility failed to leverage the Negotiable Warehouse Receipts (NWRs). to maintain transparency from the trade standpoint.
- Certain loopholes are being found in the documentation part during the inspection.
- The licensee failed to document each aspect of the operation, resulting in non-compliance.
- The licensee has yet to meet the insurance requirement.
- The facility lacks adequate infrastructure to uphold in-house operations.
- The licensee is no longer aligned with the fit and proper criteria cited in the legislation.
Conclusion
A warehouse licence is of paramount importance for those intending to render storage facilities to clients. Since most warehouses attract considerable operational resources and manpower depending on the storage capacity, they may go off-grid if a definite framework is not being followed. The Warehousing (Development and Regulation) Act, of 2007 overcomes this barrier by facilitating norms that span every aspect of the warehouse and its activities.
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