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CSB joins hands with commodity exchanges

Govt to launch trading in silk futures by year end

Arbind Gupta - Mumbai

In a significant move, the Union government in association with commodity exchanges is planning to launch future contracts in silk cocoon and yarn in the next three-four months. With this effort, India will be pioneering well-designed future contracts for this precious commodity in the world. This is to be noted that India is not only among the largest producers of silk in the world but also the biggest consumer and importer.

According to officials, the Central Silk Board (CSB) under the ministry of textiles has already received the clearance from the Forward Markets Commission (FMC) for introducing the silk future contracts in the country. For the last, few months, the CSB along with officials from the textile ministry has been in discussion with commodity exchanges like National Commodities and Derivatives Exchange and Multi Commodity Exchange towards formulating the entire process.

“The ministry has been working on this concept for some time now. We have already prepared the framework and currently in touch with some of the commodity exchanges to launch the silk futures before the end of the calender year. All necessary preparations are being put in place in order to make the entire project a success story,” stated Ms Kiran Dhingra, joint secretary, ministry of textiles, Government of India.

According to Ms Dhingra, introduction of future contracts in silk is a much deserved move in the fast changing trade order. “So far we have been restricted out trade into the domestic market. But now with globalisation of the market place, there will be need for a market mechanism which will offer fair prices to farmers involved in production of raw silk on the one side, while risk management to the consumer industry,” added the official.

Commenting on the development, Mr Narendra Gupta, chief business development officer, National Commodities and Derivatives Exchange said, “We are quite optimistic about the approach made by the CSB officials for formulating the contracts. We are currently examining the silk market which is quite volatile in terms of prices. Our exchange has got all required infrastructure in place to online trading.”

Mr Joseph Messey, deputy managing director, Multi Commodity Exchange stated that India is a potential market for silk futures since it not only a very large producer of this commodity but also a consumer.”In next two-three months, our exchange will finalised the whole process,” added Mr Messey who feels that silk futures will help farmers in realising fair prices for their products.