Has Indian Commodity Future Market Lost Steam? Existing Scenario and the Way Forward

Commodity Futures were reintroduced a few years into the beginning of the millennia. After ahealthy run, signs of corrections were seen in the Indian commodity markets in 2012. Butunearthing of the NSEL Spot Exchange scam of Rs 5,600 crore in July 2013, had disastrousconsequences on the volume and value of trade. After the revelation of scam, turnover of theexchange got reduced to almost 50% till February 2015. Though, several measures were adoptedby FMC to restore confidence among investors but there is mounting suspicion on whether theCommodity Futures Market will be able to be as buoyant in its growth as before. The followingpaper chronicles the trends of Indian commodity markets by using past data of volume and valueof trades of the commodity traded from 2003 till date. Further, the paper employs a qualitativemethod of inquiry (Delphi technique) to seek policy suggestions from experts in the area ofIndian commodity markets. From the analysis of the archived data on volume and value of tradeindicates a downward facing trend; demonstrating the rapid need for reforms to salvage thecommodity futures market. The second part lists the regulatory, legal and operational issuesidentified by experts for the downfall of the market. The paper then presents the collatedopinions of several experts on areas which require immediate attention and novel policies whichcould improve the scenario