Financial Daily from THE HINDU group of publications
Wednesday, Aug 06, 2003
Agri-Biz & Commodities
EIJHE plea to initiate futures in raw jute
Kolkata , Aug. 5
THE East India Jute & Hessian Exchange Ltd (EIJHE), one of the oldest commodity exchanges of the country, has made a fresh appeal to the Forwards Market Commission (FMC) for introduction of raw jute futures.
According to sources, EIJHE has made a fresh application after fulfilling all formalities for the initiation of raw jute futures.
EIJHE, incorporated in 1945 after merging Calcutta Jute Traders Association Ltd and East India Jute Association Ltd, conducted futures and forward trading in raw jute and jute sackings and jute hessian.
However, in 1964, the Union Government banned all futures trading in jute. Later, futures in jute goods were reintroduced but raw jute was not considered. A major factor against raw jute futures was the West Bengal Government's reluctance. It felt that raw jute futures trading were against the interest of farmers.
On February 20, this year, the Cabinet Committee of Economic Affairs (CCEA) formally approved futures trading in 54 commodities, including raw jute.
In its latest application, EIJHE has explained how it would meet the FMC guidelines. It has submitted a detailed feasibility report also.
EIJHE is banking heavily on reintroduction of raw jute futures because its other operations are falling steadily. For example, though it had permission to conduct futures trading in hessian (a special quality of jute cloth used mostly for making sugar bags), it was discontinued a year ago, as there has been hardly any participation from the members.
As per the standard practice, EIJHE takes permission from the FMC every three months for a single trading period. "There is no need to take a permission for hessian from the FMC and then record only a nominal quantity of trade in it , the official said.
Meanwhile, futures trading in jute sacking has registered a gradual fall over the years. According to the EIJHE records, approximately 21,000 jute bags used to be traded every day in the futures mode in June 2000. Three years down the line it has dropped to 18,000 jute bags per day.
At present, EIJHE has the permission to conduct forward trading in raw jute, but it is not yet doing so. A senior member of the exchange said no one was interested only in raw jute forwards trading.
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