Ccea Clears Foreign Funds Entry Into Futures Trade
In a far reaching decision, the Cabinet Committee on Economic Affairs (CCEA) yesterday cleared the much-awaited proposal for globalisation of castor oil futures and resumption of futures trading in cotton and jute goods.
Castor oil futures trading will be initially permitted for three years and could be extended after a review, an official spokesman told reporters here.
The committee also decided to upgrade the Bombay Oilseeds and Oil Exchange Limited, which is at present conducting domestic castor seeds futures at Mumbai, to international castor oil futures exchange.
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The CCEA also gave its nod for resumption of domestic futures trading in cotton (ginned and baled) for initial period of three years and the same could be extended after a review, he said and added that the step would help in stabilising prices and safeguard the interests of farmers,
stockists, exporters and others in the trade with hedging facility.
A similar decision was taken relating to jute goods, wherein futures trading is sought to be resumed for a period of three years.
At present domestic futures trading is allowed in castor seeds, turmeric, pepper, potato, jaggery and jute hessian.
Trading in non-transferable specific delivery (NTSD) contracts is permitted in cotton, raw jute and jute goods, He said.
In 1993, the government had set up a committee under K N Kabra to go into the entire gamut of futures trading in India, which had been subjected to severe regulatory mechanisms and fell under the purview of the Forward Contracts Regulation Act 1962.
The Kabra Committee had recommended futures trading in 17 commodities, including cotton, jute, castor oil, pepper etc., which submitting its report in September 1996.
The spokesman said that the proposed international castor oil futures exchange would encourage inflow of foreign funds in domestic commodity markets, thereby widening its resource base.