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For investors who have faced sluggishness and uncertainty in the commodity market for years, this news can bring a smile to their faces. The recommendations of a special panel constituted regarding Commodity Derivatives could change the direction of the market in the coming time. While these reforms promise to increase investment, transparency, and participation, a question is also arising in the minds of the general public: Will this affect everyday inflation?
Commodity Derivatives: Preparing for A Change
The panel appointed by the Securities and Exchange Board of India (SEBI) may submit its final report early next year. According to sources, the panel’s focus is on making commodity derivatives more open and attractive so that institutional investors can also play an active role.
SEBI Chairman Tuhin Kanta Pandey has already indicated that strengthening India’s commodity market is among the regulator’s priorities.
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Will the Ban on Agricultural Commodities be Lifted, or Will Controversy Increase?
The panel’s most crucial recommendation is related to agricultural commodities. There is talk of lifting the ban on derivative trading for major agricultural products like paddy, wheat, and crude palm oil.
This ban has been repeatedly imposed since 2021 because the government feared that speculation might lead to a rise in the prices of these essential goods.
However, according to the panel, available data suggest that there was no significant difference in prices before and after the ban. On this basis, it has been concluded that derivative trading does not directly affect consumer prices.
GST Clarity to Boost Confidence
The tax regime regarding Commodity Derivatives has also been under question for a long time. The panel may recommend clarity in the GST law to make it clear how much and what type of tax will apply to commodity derivatives.
This move is expected to boost the confidence of large investors and global firms who have been confused about taxation until now.
Relief in Co-location and Margins
The report may also include the suggestion that co-location be allowed for metals and energy commodities. This will speed up trading and help India’s commodity market become internationally competitive.
However, a cautious approach may be adopted regarding co-location in the case of agricultural commodities due to old inflation concerns. Along with this, a proposal to reduce margins to increase trading in Agri-commodities may also come forward.
The Road Ahead is Not Easy
After the panel’s report is released, SEBI will consult with the Government and the RBI to allow banks, pension funds, and insurance companies to participate in commodity trading. This step will certainly add depth to the market but will also increase risk.
This means that while the reforms can inject new energy into investment, the regulators will face the major challenge of maintaining balance.
Conclusion
The proposed changes in Commodity Derivatives could prove to be a game-changer for India’s commodity market. These reforms can open up new possibilities for investors, but the fear of inflation for general consumers is not entirely over. Now, everyone’s attention is focused on the panel’s final report and the government’s decision, which will determine whether these reforms bring relief or new concern.
Disclaimer :
This news article is prepared based on various sources and available information. Before making any investment decision, always refer to official notifications and seek expert advice.
Dr. Bidyut Barun Sarmah, with 22+ years of experience in print, electronic, and digital media, holds an MA and PhD in Mass Communication and Journalism. He has worked with AIR, Doordarshan, and the Publication Division under the Ministry of Information and Broadcasting. A published author and researcher, Dr. Sarmah writes extensively in both Assamese and English. He was also awarded a prestigious fellowship by the Ministry of Culture, Government of India, for his study on journalistic literature—an achievement that highlights his depth of scholarship and contribution to media studies. At Nest of News, he leads the editorial team and contributes across diverse topics.