Commodities Futures to touch Rs 12 lakh crore by 2010

New Delhi, Aug 27 (UNI) The Indian Commodity Futures Market is poised to touch over Rs 12 lakh crore by 2010, as against the current size of Rs 5.5 lakh crore, besides generating employment to over one lakh skilled and unskilled labour force.

A report on 'Opportunities in Booming Commodities Market' by industry chamber Assocham also proposed reforms, including strengthening the Forward Markets Commission.

The report will be released at the day-long conference on 'Commodities Futures Market' tomorrow at Kolkata.

The study emphasised that the current size of the commodity futures market is restricted within the range of Rs 5.5 lakh crore exchanges like National Multi-Commodity Exchange of India Ltd (NMCE) Ahmedabad, National Commodity&Derivatives Exchange (NCDEX) Mumbai, and Multi Commodity Exchange (MCX) Mumbai, clocking a collective turnover of around Rs 15,000 crore per day.

Presently, over 70 commodities including gold and silver are traded in these exchanges and as the list of items enlarges in the future, the size of commodities market will naturally broadbase to even over Rs 12 lakh crore, Assocham Chief Anil K Agarwal said.

According to Mr Agarwal, the report recommends that the government should allow banks and FIIs to enter the commodity futures market with uniform transaction charges for all commodities.

''These reforms if executed, will undoubtedly transform the commodities exchanges as they will not only enhance depth but would also increase the liquidity of the market. Besides these, educating and creating awareness among the participants would also be a major reform,'' he said.

With regard to the commodity perspective, the study points out that the wheat and pepper futures market hold good prospects in the coming years.

The wheat prices will remain firm owing to erratic weather conditions that would result in the shortage of the wheat. The black pepper market also seems to be in the recovery mode.

Although trading in futures offers many advantages like hedging, price-risk management, balanced supply demand situation, facilitating production and manufacturing activities, they can be of great help to farmers, because since they can make a decision on next year's expected price, it will help them in price discovery.

''Not only the farmers, but a large number of raw material intensive industries like agro processors, auto ancillaries, chemicals, textiles and steel, benefit by trading in futures since they are able to hedge forward both their input costs and final product prices,'' Mr Agarwal said.

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