A Study on Commodity Derivatives Market in India

D. Gnyaneswer


The main purpose of the present study would be to look into some characteristics of the Indian commodity futures market in order to judge whether prices indicate efficient functioning of the market or otherwise, particularly as this market is less developed compared to the financial derivatives markets, being constrained by its cheered history with many policy reversals.Commodity markets, especially those for agricultural commodities and other primary products have had an existence which is as old as human history itself. These markets have influenced not only the dynamics of production and resource utilization in the primary sector but also served as the mechanism through which the terms of trade played out and surplus was extracted. The modern commodity market finds its origin in the trading of agricultural products. This study traces the evolution and development of the commodity derivatives market in India. The study then goes on to outline its infrastructure and how it is regulated. The history of commodity derivative market in India dates back to the ancient times, but the first organized market was established in 1875. However, by mid 1960s government took a drastic step by banning derivatives trade altogether. The commodity derivative market remained virtually absent in next four decades and it made the restart only in early 2000s.India, now enjoys world ranking with respect to trading volume in certain commodities like Silver, Gold, Copper, Guar Seed etc. the present paper is an attempt to study the evolution of Indian commodity derivative market, trading mechanism in its various products and the future prospects of the Indian commodity Derivative market.


Derivatives, Commodity Derivatives, Commodity Derivatives in India, Commodity Futures, Operations of Commodity Exchanges.


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