Commodity Trading in India

Commodity trading in India has a long history.In fact, commodity trading in India started much before it started in many other countries.In India,Trading in Commodity futures has been existence from the 19 Th century with organized trading in cotton through the establishment of Cotton Trade Association in 1875.The Bombay Cotton Exchange Ltd was established in 1893 Followed by widespread discontent among leading cotton mill owners and merchants over the functioning of the Bombay Cotton Trade Association.

Futures trading in Oil Seeds was started by the formation of Gujarat Vyapari Mandali, which was established in the year 1900 in Mumbai. It carried futures trade in ground nut, castor seed and cotton.It is currently known as “The Bombay Commodity Exchange Limited” (BCE). 

In 1913 Futures trading in wheat was began with Chamber of Commerce at Hapur & served as price setter in Wheat till outbreak of the Second World War in 1939.

Calcutta Hessian Exchange Ltd., was established in 1919 for Futures trading in Raw Jute and Jute Goods. Futures Trading in Bullion began in Mumbai 1920 &Subsequently markets came up in other centre’s like Rajkot, Jaipur, Jamnagar, Kanpur, Delhi & Kolkata.

East Indian Jute Association Ltd. was set up in 1927 for organizing futures trading in Raw Jute. East Indian Jute Association Ltd. & Calcutta Hessian Exchange Ltd. amalgamated in 1945 to form the present East India Jute & Hessian Ltd., to conduct organized trading in both Raw Jute and Jute goods. Futures trading in raw jute suspended in 1964 reportedly on the insistence of the then State Government (WB Govt.)

In 1957 futures trading in Pepper was began with establishment of The India Pepper And Spice Trade Association (IPSTA) at Kochi. 

After Independence,The subject of futures trading was placed in the Union list, and Forward Contracts (Regulation) Act, 1952 was enacted. Futures trading in commodities, particularly, cotton, oil seeds and bullion was at its peak during this period. However, following the scarcity & Uncertainty with potential volatility in various commodities,futures trading in most commodities prohibited in 1966. That time trading was permitted only in pepper and turmeric.

1875	Bombay Cotton Trade Association	Cotton
1900	Gujrat Vapari Mandali	Oil Seeds
1913	Hspur Chamber Of Commerce	Wheat
1919	Calcutta Hessian Exchange	Jute
1920	Bombay Bullion Association	Gold
1921	East India Cotton Association	Cotton
1927	East India Jute trade Association	Jute
1957	IPSTA	Spices

Re-emergence of Futures Trading & Establishment of National Commodity Exchanges.