Commodity Trading in India

Commodity Trading in India started long time back, but the commodity trading in the country gained its’ momentum after removal of certain restrictions by the Indian Government. Government’s approval for setting up four national level commodity exchanges, which would involve multi-commodity trading has further strengthened the commodity trading market of India.

History of Commodity Trading in India
The Commodity Trading Market of established itself in India as a dominant market form much before the 1970s. In fact, in the last phase of 1970s, the commodity trading market of India started to loose its’ vibrancy.

This happened because, from the late 1970s, numerous regulations and restrictions started to be introduced in the commodity market of India and these restrictions were acting as obstacles in the path of smooth functioning of the commodity trading market.

In the recent years, many restrictions, which were negatively affecting commodity trading market, have been removed. So, now the commodity trading market of India has again started to grow in a fast pace.

In order to promote the commodity futures trading in India, Forward Markets Commission has been formed. This Forward Markets Commission actually regulates the futures trade in commodities.

In India, there are 21 commodity exchanges, which enhances the efficiency and competitiveness of the commodity trading market. Many of these commodity exchanges are regional , while many of them are commodity specific. Some of these 21 commodity exchanges provide online commodity trading facility.
Government Initiatives for promoting Commodity Trading
In the year 2003, the Indian Government approved the establishment plan of four commodity exchanges of national level. These national commodity exchanges would operate futures trading contracts for multiple commodities. The Indian Government has included more commodities in the list of permitted commodities, constructed under the Forward Contracts(Regulation) Act.
Earlier there was a rule that every spot market transaction has to be completed within 11 days. In order to promote commodity trading, the Government of India has removed this restriction. Indian Government has removed NTSD(Non-Transferable Specific Delivery Contract) option from the Forward Contracts(Regulation) Act.


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Last Updated on : 27th June 2013

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