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Cabinet panel approves futures trading in castor, cotton, jute

The Cabinet Committee on Economic Affairs has approved the proposal for globalisation of castor oil futures and resumption of futures trading in cotton and jute goods.

In the case of castor oil futures, trading may be permitted for an initial period of three years and may be extended after a review.

The Bombay Oil Seeds and Oil Exchange Limited, which at present is conducting domestic futures trading in castor, will be upgraded to an International Castor Oil Futures Exchange (ICOFE).

This step will encourage the inflow of foreign funds in domestic commodity markets thereby widening its resource base. This will also enable small producers to get the benefit of price stabilisation. Eighty five per cent of global exports in castor oil are from India.

It also approved in the same proposal resumption of domestic futures trading in cotton (ginned and baled) for initial period of three years and reviewed thereafter. This would help in stabilising prices and safeguard the interest of farmers, stockists, and exporters and others in this trade.

There will also be resumption of futures trading in jute for a period of three years.

Finance Minister P Chidambaram had assured in the budget speech the liberalisation of futures trading in commodities. Futures trading in the country has been taking place under the Forward Contracts Regulation Act, 1952.

At present the domestic futures trading is permitted in castor seed, turmeric, pepper, gur, potato, jaggery, and hessian.

Trading in non-transferable specific delivery contract is permitted in cotton, raw jute, and jute goods.

The K N Kabra Committee was appointed in 1993 to go into the question of liberalising futures trading in commodities.

UNI