iGrain India - The Indian government is likely to lift the ban on futures trading for seven agricultural commodities and their derivatives, which had been imposed to control rising prices in domestic markets. This ban was initially enforced in 2021 and extended for two additional years.
The commodities affected by the ban include non-basmati rice, wheat, gram, moong, soybean and its products, mustard and its products, and crude palm oil (CPO).
The ban was set to expire on December 20, 2024, but the Securities and Exchange Board of India (SEBI) has extended it until January 31, 2025.
Despite higher-than-usual prices for wheat and gram, and prices for non-basmati rice, mustard, and moong remaining close to minimum support levels, the soybean market has seen a sharp decline in prices, leading to dissatisfaction among farmers and industry stakeholders.
An expert committee has recommended lifting the ban on futures trading in agricultural commodities. However, the government faces a dilemma as reopening futures trading could lead to price hikes in certain commodities, which may aggravate existing concerns over high wheat and gram prices.
Additionally, the government's decision may be influenced by the 20% increase in import duties on edible oils, which has made imports more expensive. Given the complexity of these factors, the government may consider selectively allowing futures trading for some commodities while maintaining restrictions on others.