New Delhi: Indian commodity market which expanded by 50 times in a span of five years from Rs66530 crore in 2002 to Rs3,3753,36 crore in 2007, is now expected to grow at a steady speed of about 30% by 2010 and touch a volume of Rs74,156,13 crore since people’s participation in such trade would continue, according to joint findings conducted by industry chamber Assocham and Evalueserve.
In 2003, the size of commodities trade stood at Rs129364 crore, registering an increase of over 94% which thereby went to Rs571759 crore in 2004 recording an increase of 341%. In 2005, the growth in commodities trade was by 276% as trade stood at Rs2,155,122 crore in 2005. However, in 2006, though commodities trade increased to Rs2,739,340 crore, it could register year-on-year growth of 27% over the last year. For 2007, trade in commodities reached Rs33,753,36 crore and registered a growth of 23%.
Commodity futures markets are the strength of an agricultural surplus country like India. Commodity exchanges play a pivotal role in ensuring stronger growth, transparency and efficiency of the commodity futures markets. This role is defined by their functions, infrastructure capabilities, trading procedures, settlement and risk management practices. However, Indian commodity exchanges are still at a nascent stage of development as there are numerous bottlenecks hampering their growth.
Key Findings
* Growth in commodities derivatives trading which was sizeable during the last five years would now register by about 30% and reached the projected level of Rs7415613 crore
*Commodities market size is likely to experience a boost with people’s increased participation; growth projections of 30% expected upto 2010
* The turnover as proportion to GDP of commodity trade increased from 4.7% in 2004 to 18.3% in 2006 and is expected to go up manifold since commodity markets would remain friendly to their subscribers
* Daily average volume of trade in commodities exchanges by December 2007 was over Rs12,000 crore with silver and crude recording highest turnover in MCX while in NCDEX, soya oil, guar seed and soyabean and in NMCE pepper, rubber and raw jute were the most actively traded commodities on an average; this trend is likely to continue
* Futures trading in commodities results in transparent and fair price discovery on account of large-scale participation of entities associated with different value chains. This reflects upon the views and expectations of a wide section of investors related to that commodity. It provides an effective platform for price-risk management for all segments of players ranging from producers, traders, processors, exporters/importers and end-users of a commodity
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