CAI, BSE ink pact to develop cotton futures trading platform

The Cotton Association of India (CAI) and the Bombay Stock Exchange (BSE) Wednesday signed an agreement to develop the futures trading platform for cotton.

Under the memorandum of understanding (MoU), CAI and BSE will jointly develop a user-friendly cotton exchange to cater to the hedging needs of the entire cotton value chain in the country, which will be effective for the next five years, an official release said.

The Securities and Exchange Board of India (Sebi) had in December last year announced that from coming October, the country would have a unified exchange regime wherein stock exchanges would be allowed to offer trading in commodities derivatives.

BSE is planning to soon launch cotton futures contract, which will benefit the entire cotton sector in the country.

CAI president Atul Ganatra said the futures contract will not only help cotton growers get best price for their produce but also benefit exporters as well as the spinning mills by providing them a platform to hedge, which is now lacking in Indian cotton future market.

"Our endeavour will be to push BSE in developing an efficient, user-friendly and economical cotton trading platform, which is within the reach of a common cotton trader," he said.

He added that CAI, the parent body of 17 regional associations representing all the cotton growing regions of the country, will also extend its full cooperation to BSE by making available its infrastructure.

Further, Ganatra said, CAI had recently decided to set up a farmers training centre at its Cotton Exchange Building, and will spend Rs 1.25 crore on it in the next five years.

Maharashtra Agriculture Price Commission chairman Pashabhai Patel, who was also present on the occasion, said this endeavour will boost the cotton sector and help in its goal to double the farmers' income.

"Recently, we had a meeting with the state government where it was decided to take steps that will help in doubling farmers' income. This collaboration will help us achieve this goal," he added.