Ahead of the Union Budget 2024, which is now less than a fortnight away, the domestic commodity industry has urged the government to allow the resumption of trade in banned agricultural commodities including wheat, paddy (non-basmati), chana, and others.
The sentiments were echoed by the industry representatives on January 22 on the occasion of 20 years of commodity trading on exchanges. Country’s largest non-agri commodity exchange Multi Commodity Exchange (MCX) and agri bourse National Commodity Exchange of India (NCDEX) started operations in 2003.
Narinder Wadhwa, National President at Commodity Participants Association of India (CPAI) said that this day will be observed as a national commodity day from now on. “Commodity Day serves as a dedicated platform for refining participants, addressing developmental concerns, and striving to uphold elevated market integrity, benefiting investors, businesses, and governments alike,” Wadhwa said.
The continued linked the prosperity of the market on the agility of policies, adherence to principles of fairness, and timely adaptations to meet the evolving needs of both the market and its investors.
The other commodities which are currently under the ban include mustard seeds, soya bean, crude palm oil and moong.Ashok Agarwal, Executive Chairman & Founder of Global Capital said that the ban on these commodities was introduced in light of commodity inflation as agri-commodity prices soared on multiple disruptions. Agrawal said that it was now time to reconsider the decision to create more depth in the commodity markets.
The Executive Chairman lauded the efficiency of India markets and vibrancy of the equity segment while lamenting the lack of depth in the commodity segment. He said that in most developed markets, the commodity markets were much bigger than their equity peers unlike India. Citing studies, Agarwal said that there was no link between agri commodity trading and inflation.
On the prevailing ban, Kapil Dev, Chief Business Officer of NCDEX said that the disruption caused by the suspension of commodities consistently results in unfavorable outcomes.
Another demand from the government was the need to create an ecosystem for hedging in agri commodity hedging in India.
“Through our extensive engagement with equity derivatives, our nation has developed a profound understanding of derivatives. Consequently, there has been a gradual enhancement in comprehension regarding the commodities landscape over time. It is imperative for us to acknowledge the evolving landscape and actively promote hedging in the commodity sector based on the underlying exposure,” Sriram Krishnan, Chief Business Officer of NSE said.
Acknowledging the issues of community, Kamlesh Chandra Varshney, Whole Time Member at SEBI said the expansion of India and its markets over the past two decades has led to heightened market openness and increased investor trust and the credit goes to all stakeholders and “perhaps every participant in the market”.
However, the regulator and government market participants have different roles to play, he said as he assured of all help to the commodity community within the framework of the regulator’s mandate.
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