NEW DELHI, SEPT 17: The government has approved trading in dollar denomination for the international castor oil exchange being set up in Mumbai, a top civil supplies official said today.The decision was taken a few days ago and this was likely to help in approval for dollar-denominated trading at the International Commodity Exchange for pepper at Kochi, civil supplies and consumer affairs secretary N N Mookherjee said at the inauguration of a two-day workshop on commodity futures market.Later, speaking to PTI on the sidelines of the workshop, he said government approval for trading in dollar for the castor oil exchange would automatically apply for the pepper exchange. "Trading operations started (at the pepper exchange) in November 1997 but even today there is hardly any foreign participation. One of the main obstacles to such participation is that the contracts are rupee-denominated, not dollar-denominated,'' he said."The matter has been taken up with the finance ministry and we are confident thatthey will agree very shortly to the dollar-denominated contracts for pepper exchange," he told the workshop. The government had cleared the setting up of the International Castor Oil Exchange in August 1997.However, the Bombay Oil and Oilseeds Exchange, which is setting up the exchange, is taking considerable time in framing the rules and regulations for the exchange.On the other hand, the international pepper exchange, which began trading in November last year, has been hit due to lack of participation by foreign players as government allowed trading in rupees only. The decision to allow trading in dollars is expected to give a fillip to international futures trading in the country.Mookherjee said government had given serious attention to strengthening of commodities market after liberalisation and, as a sequel, a committee headed by Prof K N Kabra was set up in 1993 to study the scope for futures trading.The Kabra committee's recommendations were significant since it was the first set ofsuggestions to be taken up seriously for implementation by the government but some time had been consumed to process the recommendations and implement them."To an extent, the measured pace of implementation of the recommendations is a deliberate decision. We do not want to plunge headlong into a territory which has remained uncharted for decades only to later regret the result of our hasty action," he said.Mookherjee said government was committed to the revival of futures trading and initially government had permitted futures trading in six commodities, some of them minor. But since 1995, government had given permission for futures trading in five more commodities, including major ones like cotton, soyabean and jute goods.Last week, cabinet had approved amendments to the Forward Contract (Regulation) Act, including a provision for lifting the ban on option and for strengthening the Forward Markets Commission. The government had also, in principle, decided to allow futures trading in edible oilseeds,edible oil and their cakes.The World Bank has now come forward to assist in strengthening commodities exchanges besides the forward markets commission. It would also help in establishment of a market monitoring and surveillance system.Gajanand Pathmanathan, principal economist, World Bank, said the bank had come forward to extend a two-year grant under institutional development fund for development of commodity exchange in India at an outlay of 490,000 dollars. The grant would facilitate in identifying training needs and strengthen institutional relations.
