Commodities exchanges in India engage to trade in particular commodities. This trade does not comprise trade of securities, trade of stock index futures, trade of options and other market trading. The concept for commodity exchanges started in 19th century in Unites States for buying and selling commodities. It took almost three decades for government of India to allow commodity exchanges in India.
Through commodity exchanges in India buying and selling of commodities are exclusively done for the sub-continent. Commodity exchanges in India provide an easy platform for Indian businessmen to buy and to sell commodities by organizing market forums. Commodity exchanges are like central market hub which provides a single meeting place for Indian buyers and sellers. Through this central market hub, Indian buyers and sellers also set quality and quantity standards of the commodities. Establishment of business rules and regulations are done to satisfy the interests of the businessmen.
Various types of commodities are traded through commodity exchanges in India. Agricultural commodities are also traded with full interests from traders. Commodity exchanges in India also bring exclusive report on storing, pricing and transfer of every commodity. This is done by managing various fields of market to stop any chaotic condition (economic depression) in market commodities which might affect by worse economic factors.
In India there are 25 recognized commodity exchanges operating actively. Within them 18 commodity exchanges are domestic future exchanges. But, three of them are known as national level multi commodity exchanges in India. These three sophisticated commodity exchanges in India are National Commodity & Derivatives Exchange Limited (NCDEX), Multi Commodity Exchange of India Limited (MCX) and National Multi Commodity Exchange of India Limited (NMCEIL).
All these three commodity exchanges go online for Indian businessmen. They are designed and modified on the basis of traditional business platform called “Adhat” and “Vayda Vyapar”. This is done to provide better risk coverage proficient delivery of commodities for Indian businessmen. Government of India takes ultimate control on all the above-mentioned commodity exchanges in India under Forward Market Commission (FMC).
National Multi Commodity Exchange of India Limited (NMCEIL) which is the first online multi-commodity exchange in India that goes through demutualization. The first granted approval was given to NMCEIL to start trading with edible oil on 25th July, 2001. From 26th November, 2002, NMCEIL becomes an active part of commodity exchanges in India through various commodities. NMCEIL promotes commodities through its supporting managing institutions. This support exclusively include Central Warehousing Corporation (CWC), National Agricultural Cooperative Marketing Federation of India Limited (NAFED), Gujarat Agro Industries Corporation Limited (GAIC), National Institute of Agricultural Marketing (NIAM), Gujarat State Agricultural Marketing Board (GSAMB) and Neptune Overseas Limited.
National Commodity & Derivatives Exchange Limited (NCDEX) has started its commodity exchange operation from 15th December, 2003. This is the single and only commodity exchange which is exclusively promoted and supported by institutions of national level. These national level supportive institutions include ICICI Bank Limited, Life Insurance Corporation of India (LIC), National Bank for Agriculture and Rural Development (NABARD), National Stock Exchange of India Limited (NSE), Punjab National Bank (PNB), CRISIL Limited, Indian Farmers Fertilizer Cooperative Limited (IFFCO) and Canara Bank. NCDEX is a public limited company, located in Mumbai, India’s commercial hub.
Multi Commodity Exchange of India Limited (MCX) also has its headquarter in Mumbai. It provides online trading, clearing and settlement operations across the sub-continent. MCX has acquired permanent recognition from government of India and is known as an independent commodity exchange. MCX has also gone through demutualization process and started commodity trading in the month of November, 2003. MCX has strategic alliance with Pulses Importers Association, Bombay Bullion Association, Solvent Extractors’ Association of India, Bombay Metal Exchange and Shetkari Sanghatana. Key shareholders of MCX are State Bank of India, Union Bank of India, Financial Technologies (India) Ltd., Canara Bank, Corporation Bank and Bank of India.
Commodity exchanges in India play a crucial role in India’s economic development and growth. If price of any commodity is not fixed then commodity exchanges determines the price of that particular commodity in an organized way. The price is determined examining right from grassroots level and it goes through producers, retail investors and even end-users. Commodity exchanges have brought Indian buyers and seller in an equal importance to trade and to do business swiftly.