The NCDEX move, announced on Wednesday, came three years after it tied up with Skymet to launch what would have been the country’s first tradable weather index, Skymet chairman Jatin Singh said.
“NCDEX took baseline data from us, we did an awareness campaign for the product, (provided) data know-how, and data feed for two years. When the time came to launch the product for trading, they tied up with IMD, which is not acceptable, and we are approaching the (market) regulator Sebi and simultaneously challenging the exchange’s decision in the court of law.”
In August 2023, NCDEX, the agriculture commodity exchange, signed a memorandum of understanding with Skymet. When contacted, NCDEX declined to comment on the issue.
The NCDEX-IMD RAINMUMBAI index, which will allow market participants to hedge against variations in India’s notoriously fickle monsoon rains, is scheduled to launch on May 29.
NCDEX has also tied up with IIT Bombay for providing the scientific framework, the CDR (cumulative deviation rainfall) design, and the statistical validation underpinning the RAINMUMBAI contract. IMD will provide last three decades’ rainfall data and current updates.
Globally, tradable weather indices are used by market participants to hedge their financial risks against frequent weather changes due to the growing impact of climate change.
NCDEX, in a statement upon signing an MoU with IMD for data feed and indices last July, said, “This strategic alliance lays the critical groundwork for the launch of India’s first weather derivatives—a long-anticipated market instrument designed to help farmers and allied sectors hedge against climate-related risks such as erratic rainfall, heatwaves, and unseasonal weather events. With this partnership, NCDEX will develop a rainfall-based derivative product, among others, using historical and real-time datasets sourced from IMD."
Earlier, in June 2020, NCDEX and Skymet had launched two national-level rainfall-based indices – the Indian Monsoon Index (Cumulative Monsoon Index) and the Indian Rain Index (Monthly Cumulative Rainfall Index) – but these were meant for monitoring the movement of rainfall, not for trading.
For NCDEX, the new rainfall derivatives contract is a pilot project based on Mumbai’s rainfall. India’s commercial capital acts as a midpoint in the monsoon’s journey, which begins in Kerala, moves to Mumbai and then proceeds to the north. The exchange is also exploring eastern monsoon contracts and temperature-linked products. Temperature contracts could potentially run through the year.
 "Jatin Singh, Chairman, Skymet")