Essential Commodities (Amendment) Bill, 2020: Key Facts

On September 15, 2020, Lok Sabha passed the bill to amend Essential Commodities Act, 1955. The bill seeks to deregulate food items, pulses, cereals and onion.


The amendment is already being implemented as ordinance. The GoI, in June 2020, promulgated the Essential Commodities (Amendment) Ordinance, 2020.

Key features of the bill

  • The amendment empowers Government of India to control, supply, production, distribution, trade and commerce of certain commodities.
  • The Central Government can now regulate supply of onions, potato, edible oil seeds, oils, cereals, pulses under extraordinary circumstances. The extraordinary circumstances include famine, war, natural calamity and extraordinary price rise.
  • It empowers the central government to regulate stock of essential commodities.
  • The amendment is not applicable to food items that are included in Public Distribution Systems. Also, the stock limits are not applicable to PDS outlets. Under PDS system, the GoI provides food grains at subsidized prices to eligible prices.

When can stock limit be imposed?

The amendment provides conditions to impose stock limit to the essential commodities. They are as follows

  • When there is 100% increase in retail price of horticultural produce
  • When there is 50% increase in retail price of non-perishable agricultural food items

The increase is to be calculated over the price prevailing in twelve months or is to be compared with the average retail price of last five years. The price whichever is lower is to be considered

Need for the amendment

  • Imposition of curbs on stocking of farm produce under Essential Commodities Act was one of the major reasons for less entrepreneurial spirit. It hindered the investment towards agriculture sector.
  • India became surplus in most of the agricultural commodities and farmers were unable to receive better prices due to lack of investment in processing, cold storage and exports.


The amendment will help farmers unbind the farmers to sell their crops. The amendment breaks the boundary that restricted farmers to sell their produce only to licensed traders in the Agricultural Produce Market Committee (APMC) Mandis.

What are essential commodities?

Currently there are seven commodities that are scheduled under the Essential Commodities Act, 1955. They are

  • Essential drugs
  • Fertilizers (Inorganic, organic or mixed)
  • Food stuffs including oils and edible oil seeds
  • Raw jute and jute textiles, hank yarn made from cotton
  • Petroleum and Petroleum products
  • Seeds of fruits and vegetables, and seeds of food crops; Seeds of cattle fodder
  • Jute Seeds and cotton seeds

The act was enacted to make sure that the essential commodities are easily available to consumers and also protect them from exploitation by traders.

Tea, coffee do not come under essential commodities. It is put under the category of beverages. Sugar has been included under Essential Commodities Act.