Adani Agri Logistics Ltd and Leap India Food & Logistics Pvt Ltd have together been awarded contracts worth over IN₹16.5 billion under the Food Corporation of India’s (FCI) ‘Hub and Spoke’ silo modernisation programme, following a key government decision to drop an ‘anti-monopoly’ clause from the tender process.
Across two phases, the two companies secured 110 out of 134 FCI silo contracts. According to official data, approximately 4.65 million metric tonnes (Mt) of the total 6 Mt grain storage capacity under the programme will be operated by these two entities.
The tender process for the programme, intended to modernise India’s grain storage for the public distribution system, saw a significant change after a Public-Private Partnership Appraisal Committee (PPPAC) meeting on May 13, 2022.
Anti-monopoly clause removed
FCI had initially proposed a clause that would restrict a single bidder to winning only one project bundle to prevent market concentration. However, minutes of the PPPAC meeting show that the NITI Aayog and the Department of Economic Affairs (DEA) objected to this restriction, arguing in favour of letting “market forces prevail” and to encourage competition.
Following this recommendation, the anti-monopoly clause was dropped, and qualification criteria for bidders were based solely on financial capacity. The committee also decided against using a reverse auction mechanism.
Tender outcomes
Following the policy change, the tender results showed a high degree of concentration.
- Phase I: In the first round, Adani Agri Logistics Ltd won all 66 contracts tendered under the DBFOO (Design-Build-Finance-Own-Operate) model. Overall, Adani secured 70 out of 80 Phase I contracts, worth approximately IN₹97.13 billion.
- Phase II: In the second phase, Leap India Food & Logistics Pvt Ltd won 38 out of 48 tendered contracts, worth approximately IN₹61.73 billion.
The FCI has stated that all contracts were awarded through an open, transparent and competitive bidding process, and that the winning bidders were the lowest for the projects they secured.
As reported by Newslaundry, the large size of the project bundles – with some exceeding IN₹3.9 billion – favoured companies with substantial financial resources, effectively limiting participation from smaller or mid-sized firms.
Programme status and criticism
According to FCI records, construction has begun at 74 of the 80 silo sites awarded in Phase I, with at least five already operational. However, several contracts in Phase II are still pending the fulfillment of conditions precedent (CP), including land acquisition and statutory clearances.
The concentration of FCI silo contracts has drawn criticism from farmer unions and political parties, who have demanded the reinstatement of the anti-monopoly clause and a Joint Parliamentary Committee (JPC) inquiry into the decision-making process that led to its removal.
The FCI has rejected allegations of favouritism, stating that no restrictions were imposed to encourage investment in what it calls a “sunrise sector” with significant growth potential. It has also noted that competitive bidding ensured a fair price discovery process.
