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M.R. Subramani

CHENNAI, Sept. 16

THE Forward Markets Commission (FMC) is likely to give permission to one more aspirant— this one from Kolkata— for setting up tea futures.

"We plan to give permission to one more aspirant from Kolkata for setting up tea futures," the FMC Chairman, Mr Anand Kumar Bhatt, told Business Line.

Already, FMC has given permission to the Bombay Commodity Exchange (BCE) and United Planters' Association of Southern India (Upasi) to set up tea futures.

Though Mr Bhatt did not provide details of the aspirant, Tea Auction is reported to be the one. Tea Auction was one of the initial bidders for setting up tea futures but it was redraw its plans by FMC. After doing the needful, it had made a presentation following which FMC is set to give the go-ahead.

FMC, an arm of the Union Food and Consumer Affairs Ministry that supervises the functioning of commodity markets in the country, is particularly unhappy that both BCE and Upasi have been slow off the blocks to start the futures. "The progress by both of them has been rather slow," Mr Bhatt said.

BCE, which was first to get the Government permission to set up tea futures, has not got back to FMC with any report on the developments about setting up tea futures.

"Upasi, too, has been slow in doing things," he said.

According to Upasi sources, the planters' body has set up a core committee, headed by its Tea Committee Chairman, Mr N. Dharmaraj, to work out the process to set up the futures. It is also in the process of appointing a consultant to help in setting up the exchange.

Initially, Upasi is looking at three cut, tear and curl (CTC) tea contracts — two for dusts and one for leaf. However, it plans to include a contract for orthodox tea at a later stage.

Upasi is also considering online trading. It is yet to make up its mind on the location of the headquarters of the exchange as to Coimbatore, Coonoor or Kochi .

Meanwhile, RBI has ruled out futures trading in gold. "RBI has recommended spot trading in gold in the country," Mr Bhatt said.

He, however, declined comment on sugar industry's contention that e-sugartrade, which has been allowed to start sugar futures, was dragging its feet on launching its proposed online trading.

According to industry sources, e-sugartrade was using the Government's decision to revert to monthly release mechanism in sugar as a ruse to put off its launch.

"We think the monthly release mechanism was an one time affair. We have taken up e-sugartrade's issue with the Food and Consumer Affairs Ministry," Mr Bhatt said.

In view of futures trading being launched in a variety of commodities, the Government has also revoked the ban on non-transferable specific delivery (NTSD) contracts, which prohibits traders from entering into forward contracts. Under the Forward Contract (Regulation) Act, transactions are confined to ready contracts in which delivery and payment are to be effected within 11 days.

"With futures being allowed, we find there is no meaning in the existence of NTSD. The Government has come out with a notification on this recently," Mr Bhatt said. Commodities which have not been removed from this list are cotton, oilseeds such as groundnut, sesamum, rice bran, castor and minor oilseeds.

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