Govt to allow futures in eight oilseeds and oils

The oilseeds production in the country has increased significantly to around 250 lakh tonnes in 1998-99 from the level of less than 150 lakh tonnes almost 10 years ago. In terms of oil, production in the current year is estimated at over 90 lakh tonnes. India is more or less self-sufficient in edible oil following the launch of oil mission.

The government had allowed futures trading as part of its overall objective of liberalising the economy. The step would help in stabilising the wide fluctuations in prices and would safeguard the interestsof farmers, stockists and exporters and others involved in the trade of these commodities by providing hedging facility to minimise the risk of adverse price fluctuations.

Now, the Forward Market Commission will regulate and formulate rules for forward trading in eight oilseeds and their products. The Forward Contract Market Regulation Act would also be amended accordingly to allow forward trading.

A ban on forward trading was imposed in early sixties to check excessive speculation in all types of commodities. Excessive speculation in these commodities was witnessed as the population was increasing while production could not keep pace.

It is learnt that initially, forward trading centres would be opened in the producing centres only. For example, forwarding trading in groundnut and its products would be allowed in one or two centres of Gujarat.

Welcoming the government decision, the Bombay Oilseeds and Oils Exchange President, Navinbhai Shah said that this is a step in the right direction as theoilseeds industry was facing price fluctuation in the absence of future trading. “Futures will provide hedging facility to the all sections of the oilseeds sector,” he added.