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Wider participation in commodity derivatives is expected to strengthen India's price discovery ecosystem while expanding investment opportunities beyond traditional asset classes, industry leaders told ANI on Thursday, highlighting growing interest in commodity-based investment products and the country's long-term potential to emerge as a price reference in global commodity markets.
Speaking to ANI, Commodity Participants Association of India (CPAI) alternate President Ajay Garg said commodities are increasingly emerging as an important part of diversified investment portfolios because they offer protection against inflation. "Commodity is a diversified asset class because it is inflation protected... Generally, people should have 7 to 10 per cent investment in commodities. Today there are a lot of tools available like people can invest through ETFs in gold and silver, and we foresee some more ETFs in some other commodities would also come in future," Garg said. He said products such as Electronic Gold Receipts (EGRs) and commodity derivatives have widened investment avenues by allowing investors to take physical delivery of gold and silver. Garg also expressed confidence that India's growing consumption of commodities and increasing retail participation could eventually help the country emerge as a price setter in global commodity markets. Meanwhile, in an interaction with ANI, MCX Managing Director and CEO Praveena Rai said strengthening India's domestic price reference is one of the key objectives behind expanding participation in commodity derivatives. "It helps to establish an India price reference. This is very, very important because then they don't have to worry what the price is for the day. Whether it is metal traders or jewellers, they can look at an MCX price on the screen which is a traded price and work off that to really set their price for the day," Rai said. She added that the objective is to further expand the market's footprint so that the Indian price reference becomes well established and widely recognised. Bharat Metal Exchange President Sushil Kothari told ANI that delivery-based commodity contracts have addressed one of the key challenges faced by physical traders by improving access to raw materials through exchange delivery centres. "Now the issue with the delivery is resolved... our base metal community can get the material. Getting material from MCX is not a tough job now. It's very easy," Kothari said. Separately, during a press conference ahead of the MCX Global Commodity Conclave, officials said the three-day event, scheduled for August 12-14, will bring together participants from physical and financial commodity markets to discuss themes including commodity derivatives, hedging, price discovery, risk management, retail participation and emerging segments such as power, coal and ferrous commodities. During the briefing, MCX also said the conclave will bring together policymakers, regulators, financial institutions, brokers, industry participants and international commodity exchanges to discuss ways to deepen India's commodity markets and expand participation across the sector. (ANI)
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