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Traders still sceptical, adopt wait & watch stand

EICA introduces online trading in cotton futures
Arbind Gupta - Mumbai

The East India Cotton Association (EICA) has finally commenced the much awaited online trading in the Indian Cotton Contract (ICC). The web-enabled trading of cotton futures is expected to boost the overall volume by enhancing the level of participation.

Talking to Express Textile, Mr Suresh Kotak, president, EICA said, “We are making all possible efforts to popularise trading of cotton futures in the country. The trade along with the industry will have to come forward to utilise this vital tool in order to hedge the risk of price fluctuation.”

Experts are of the view that online trading if implemented adequately, can go a long way in revolutionising the entire cotton economy. “So far the level of participation has been very low with only handful of players participating in the trading. But with online trading in place, even upcountry traders will also be able to access the system,” stated Mr R V Bhatia, deputy manager, Amit Spinning Industries.

However, there are views that the success of the cotton futures will depend largely upon as to how the trade and industry respond to the whole process. In fact, in the last three years, the trading volume has not been encouraging. This is despite the fact that the EICA has time to time made some modifications in by-laws in order to bring about flexibility in the system. “It is really difficult to understand as to why the traders as also the user industry are not using this mechanism which is widely accepted in all the major cotton economies in the world,” observed Mr K F Jhunjhunwala, vice president, EICA.

Experts have emphasised the need for an aggressive awareness campaign. “So far whatever awareness has been created is on a very limited scale. Since the futures trading re-started after a gap of more than 30 years in December 1998, it is essential that an aggressive campaign is launched forming small groups at various places,” said Mr Shrish Shah, partner, Bhaidas Cursendas & Co.

Trade also attributes the failure of cotton futures trading to the ongoing sluggishness in the industry which is hesitant to try any new system in the given situation.

“Now when the industry condition is slowly looking up, we are optimistic that cotton futures will be tried on the higher side. Moreover, once the benefit start accruing, the people who are currently shying away, will rush to explore the system. In fact, there is need to kick start the process,” stated Mr Jhunjhunwala.