The Indian government is expected to make a significant decision regarding the potential closure of the Metals and Minerals Trading Corporation of India (MMTC) on October 23. This action is part of the government’s new enterprise policy for Public Sector Undertakings (PSUs) operating in non-strategic sectors, as reported by The Telegraph.
In September 2022, MMTC, along with the State Trading Corporation (STC) and Project & Equipment Corporation (PEC), lost their status as canalising agencies. The closure of STC and PEC may also be addressed during the decision-making process on October 23, according to the report.
Notably, in August 2023, the Securities and Exchange Board of India (SEBI) revoked MMTC’s stockbroker license due to its involvement in illegal paired contracts related to the National Spot Exchange Ltd. MMTC was found to have engaged in “paired contracts” without the necessary regulatory approval.
The New Enterprise Policy dictates that all PSUs operating in non-strategic sectors will either be privatized or closed if privatization is not a feasible option. Reports indicate that a previously approved offer for sale did not generate investor interest in MMTC.
The decision concerning the future of MMTC will be made by the Alternative Mechanism (AM), a committee comprising Finance Minister Nirmala Sitharaman, Road Minister Nitin Gadkari, and Commerce Minister Piyush Goyal. MMTC operates under the purview of the commerce ministry.
Currently, the government holds a 99.33 percent stake in MMTC. Previously, MMTC served as a canalising agency responsible for the import and export of high-grade iron ore, manganese ore, chrome ore, copra, and other valuable metals. At one point, MMTC was the largest non-oil importer in the country.
In the fiscal year 2022-23, the state-run trading firm reported a profit of ₹1,076.07 crore, a significant improvement from the ₹241.93 crore loss in 2021-22.
The fate of STC and PEC, which are also under the administrative authority of the commerce ministry, will likely be discussed in the same meeting. While the government holds a 90 percent stake in STC, it is the sole owner of PEC. STC plays a pivotal role in importing essential items for mass consumption, such as edible oils, pulses, sugar, and wheat, while PEC serves as the canalising agency for machinery and railway equipment import and export.
The proposed closure of these entities is in line with guidelines related to the non-strategic sector.
