Commodity trading in India commenced much before it started in many Asian countries. But years of colonial rule and lack of focus by the government caused it to diminish in the country. However, commodity trading was revived recently. Today, apart from numerous regional exchanges, India has four national commodity exchanges, namely, Multi Commodity Exchange (MCX), National Commodity and Derivatives Exchange (NCDEX), National Multi-Commodity Exchange (NMCE) and Indian Commodity Exchange (ICEX). MCX and NCDEX have seen strong year-over-year volume growth, but they still pale in comparison to financial exchanges MCX Stock Exchange and the National Stock Exchange of India (NSE), both of which continue to grow their currency markets (see "Arrow pointing up," below).
The regulatory body governing commodity trading in India is the Forward Markets Commission (FMC), which was set up in 1953. FMC announced its intention to develop the country’s commodity exchanges a few months ago but has run into many roadblocks. The biggest challenge it currently faces is the lack of uniformity (in transaction charges, KYC norms, etc.) among the various exchanges. The fact that regional exchanges feel marginalized by national ones isn’t making the regulators’ job any easier. Another issue that requires immediate attention is monitoring trade uniformity because unlike SEBI (Securities Exchange Board of India — the stock market regulator in the country) that monitors the entire trade on a centralized server at the regulator’s office, FMC lacks the technological infrastructure to do so.
All of these are significant issues that the regulators in India need to address to develop commodity trading in the country. However, just like China, trading volumes in India are soaring (turnover of 23 commodity exchanges, accounted together, saw a giant leap of 57.5% year–over–year in July 2011) and sweeping regulatory changes in the next two years or so would not be a surprise.