The value of commodity futures trade in India has witnessed a significant jump from a mere 5.81 per cent of the Gross Domestic Product (GDP) at current prices in 2003-04 to 20.14 per cent of the GDP in 2004-05 and nearly 66 per cent of GDP in 2005-06. According to the Ministry of Consumer Affairs, the total value of commodity futures trade was Rs 21.34 lakh crore in 2005-06, up 274 per cent from Rs 5.71 lakh crore in 2004-05. The volume of trade has also gone up considerably by 244 per cent to 668.5 million tonnes in 2005-06, against 194.2 million tonnes in 2004-05. With the establishment of the three national level commodity exchanges, the trading volume as well as the value have increased manifold within a short span of time.
The National Multi-Commodity Exchange of India, Ahmedabad, started trading in November 2002 and the other two - the Multi Commodity Exchange of India Ltd and the National Commodity and Derivatives Exchange Ltd., in Mumbai in November 2003. Beside the 3 national-level exchanges, there are 21 other regional exchanges recognized for futures trading in commodities.
At present, futures trading is permitted in 103 commodities. In 2005-06, permission was granted for trade in furnace oil, crude oil, mentha oil, PVC, polypropylene and natural gas. Onion has also been recently notified for futures trading.
As of June 2006, the average daily trading of commodity futures is around Rs 12,000 crore. With barely a fraction of 1 per cent of the population trading in commodities, the possibilities are endless. It is not a fancy to say that in a few years’ time, we would see an astounding Rs. 1 lakh crore of daily turnover on the commodity exchanges of India, dwarfing the equity markets.
