Surat Textile Traders Mull Agent Verification To Avert Frauds
In a bid to prevent frauds related to non-payment of textiles, the Surat based Federation of Surat Trade and Textile Association (FOSTTA) has introduced a standard operating procedure (SOP).
The SOP mandates that agents submit their complete details in a form to traders before entering into transactions.
The move aims to enhance transparency and accountability in Surat’s bustling textile markets, known to be the largest in India.
Prashant Patel, President of the Federation of Indian Micro and Small & Medium Enterprises (FISME), highlighted that fraudulent activities take place in Surat textile markets, often involving brokers.
“Such frauds have been prevalent in the textile market for a considerable period of time, with a significant number of these frauds occurring when a broker is involved,” he told ToI.
Patel suggested that the database derived from the forms completed by agents should be made publicly accessible to aid in identifying individuals engaged in fraudulent practices.
Patel further recommended that there should be a dedicated legal team to address and counter these issues as well.
There are potential benefits of making the agent database public, as it could aid in tracking down individuals involved in fraudulent activities.
However, at the same time, it underscores the need for careful consideration of legal implications before implementing such a measure.
The introduction of the SOP comes in the wake of a rough estimate that suggests frauds amounting to over Rs 800 crore have taken place in Surat’s textile market in a year.
In most cases, the buying party disappears without making payment, taking advantage of the 180-day payment period by continuing to purchase goods for four to five months before vanishing.
FOSTTA has handled many such cases in the recent past and found instances where traders and agents were negligent in verifying the background of the buyer party, leading to disputes.
In the form, agents are required to provide details like name, firm’s name, contact numbers, office and residential address, native place, GST number, Aadhaar number, PAN number and bank details.
This is expected to enable traders to conduct thorough background checks before engaging in business transactions.
Failure to comply with this requirement will result in FOSTTA denying assistance to the trader through mediation or legal means for recovering payment in case of disputes.
Surat has around 210 textile markets and over 70,000 shops selling yarn, fabrics and garments.
