Private Entrepreneur Guarantee Scheme (PEGS)

About 75% of the Indian population depends on agriculture and a

gro-based industries for their livelihood. India produces approximately 263.3 Million Tonnes (MT) of food grains every year. Unfortunately, 10% of grains are wasted every year because of the insufficient silos, cylindrical steel bins to store grains, and poor infrastructure in the warehouses. Currently, we have about only 95.476 million MTs of storage capacity and there is a dire need to build at least 35 million MTs of storage space. In order to overcome the crisis of storage constraints and enhance the warehouses to the scientific standards, the Government of India launched the Private Entrepreneurs Guarantee Scheme (PEGS). In this article, we shall explore the PEG Scheme in detail and how private entrepreneurs can benefit from it.

PEGS Scheme and its Objectives

The Food Corporation of India (FCI),

in conjunction with Central Warehousing Centre (CWC) and State Warehousing Centre (SWC), launched the PEG Scheme. It was formed to construct and hire warehouses through private1 The private entrepreneurs can avail the fair share of their investment from FCI for a period of ten years. The objectives of the scheme are,

To procure more grains by constructing new warehouses
To hire the warehouses from private entrepreneurs and enhance it with high scientific standards
To overcome storage constraints across the nation
To ensure safe stocking of food grains
To control post-harvest storage loss and increase sales
To encourage private sector participation in agricultural activities

Eligibility Criteria

Warehouses with the minimum capacity of 25,000 MTs will be given preference by the FCI.
It should preferably within 8 km radius of Railway Good Sheds.
The entrepreneurs can develop the additional storage capacity for their other agro products after obtaining a prior consent from the FCI.
The entrepreneur should have a land of his own or he may acquire it within 120 days after the tender issue date.

PEGS Committee

The State Level Committee constituted by FCI to examine the storage need before processing the tender is as follows,

Chairman of ED (Zone)
General Manager (Region)
FCI & Director/Food Commissioner of the State
Managing Director State Civil Supplies Corporation (SWC)
Regional Manager of Central Warehousing Corporation (CWC)

Application Procedure

Private entrepreneurs can avail the scheme with the help of the nodal agencies under two bid systems.
- Technical Bid

Once the relevant document is submitted by the entrepreneur, the State Level Committee examines the warehouses for

The extent of procurement level
The consumption needs of the region
Availability for the FCI storage needs

The State Level Committee will send the report to the FCI Headquarters where the High-Level Committee (HLC) examines it. HLC will advance the tender to the financial bidding if the storage capacity is required in the region. The tender notification will be advertised by the FCI, through its nodal agency CWC/SWC, on its website. Advertisements will also be printed in one national and regional newspaper.

- Financial Bid

Tenders are generally given to the entrepreneurs who quote the lowest bid.

Funds Allotted under the Scheme

The Government of India has allotted the fund of Rs.5000 Crores under this Scheme. As per the statement released by the Ministry of State for Consumer Affairs, Food and Public Distribution, the scheme is currently active in 20 states. The capacity of 154.49 Lakhs MT has been sanctioned for the construction, out of which 137.40 Lakh MT has been completed.

GST registration of warehouses is applicable as per industry regulations.

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Frequently Asked Questions

Common questions about Private Entrepreneur Guarantee Scheme for Warehouse Development.

The Private Entrepreneurs Guarantee Scheme (PEGS) is an initiative launched by the Government of India to construct and hire warehouses from private entrepreneurs. The scheme aims to enhance the storage capacity for food grains and overcome the storage constraints across the nation.

Private entrepreneurs who own land or can acquire land within 120 days after the tender issue date are eligible to participate in the PEGS Scheme. Preference is given to warehouses with a minimum capacity of 25,000 MTs, preferably within an 8 km radius of Railway Good Sheds.

The application procedure involves a two-bid system – a technical bid and a financial bid. The technical bid is evaluated by the State Level Committee and the High-Level Committee (HLC) to assess the storage need and capacity requirements. If approved, the tender is advertised, and private entrepreneurs can submit their financial bids.

The main objectives of the PEGS Scheme include procuring more grains by constructing new warehouses, hiring warehouses from private entrepreneurs to enhance scientific standards, overcoming storage constraints, ensuring safe stocking of food grains, controlling post-harvest storage loss, and encouraging private sector participation in agricultural activities.

The Government of India has allotted a fund of Rs. 5,000 Crores for the PEGS Scheme. As per the Ministry of State for Consumer Affairs, Food and Public Distribution, the scheme is currently active in 20 states, with a sanctioned capacity of 154.49 Lakh MT for construction, out of which 137.40 Lakh MT has been completed.

The State Level Committee, constituted by the Food Corporation of India (FCI), examines the storage need before processing the tender. The committee comprises representatives from FCI, the State Civil Supplies Corporation, and the Central Warehousing Corporation.

Tenders are generally awarded to the private entrepreneurs who quote the lowest bid during the financial bidding process. The warehouses must meet the eligibility criteria, including minimum capacity and location requirements.

Under the PEGS Scheme, private entrepreneurs can avail a fair share of their investment from FCI for a period of ten years for constructing and hiring out the warehouses.

The PEGS Scheme provides private entrepreneurs with an opportunity to participate in agricultural activities and invest in warehouse construction. They can earn a fair share of their investment from FCI over a ten-year period while contributing to overcoming the nation's storage constraints.

Yes, GST registration of warehouses is applicable as per industry regulations for warehouses constructed under the PEGS Scheme.