Consider steps to reduce transaction cost, improve ease of doing biz: Commodity market players to FM

Commodity market participants on Thursday asked Finance Minister Nirmala Sitharaman to consider steps to reduce transaction cost to make Indian markets internationally competitive and improve ease of doing business.

The participants sought reduction in overall cost of transaction for equity as well as commodity markets and also flagged issues related to Long Term Capital Gains Tax (LTCG), shrinking trading volume, increased regulatory compliance and closing down of several brokerage houses, Commodity Participants Association of India (CPAI) President Narinder Wadhwa told PTI after their meeting with the minister.

Sitharaman has been holding similar meetings since last month with representatives of various sectors, including banking, automobile and realty in order assess the problems faced by them as the government looks to undertake steps to arrest the slowdown in the economy.

CPAI is the apex pan-India association of participants in commodity exchanges and commodity derivative segments.

Wadhwa said Sitharaman assured them that whatever steps can be taken, would be looked into by the government.

He said the commodity market volume has shrunk drastically from Rs 90,000 crore per day a year ago on an average basis to Rs 35,000 crore per day now.

"So we have asked the minister to take steps to reduce cost of transaction for commodity and equity market," Wadhwa said.

Commodity futures are a low margin game and imposition of levies like securities transaction tax (STT), commodity transaction tax (CTT) and Goods and Services Tax (GST) have added huge cost on the market players and also changed the economics of trade, as per the participants.

Besides, market players are looking for greater ease of doing business with respect to regulation in the sector.

"In fact, as many as 66 brokerage houses have shut their shops from 2018 till date and another 31 are in the pipeline (to do so) because of excess compliance, cost burden and non-participation from investors," Wadhwa said.

He said the market participants also apprised the minister about the status of the NSEL scam and orders passed by the markets regulator Sebi in the matter.

In addition, a critical review was undertaken of the LTCG regime for channelising investment in long-term productive capital and financial assets.