The spurt in off-the-exchange deals has assumed significance after the recent FMC (Forward Markets Commission) diktat that bars the exchange from conducting futures trade beyond August 15. Besides, the rise in delivery defaults a couple of months ago has only increased such direct deals.

According to the figures available with The Financial Express, the total exports of black pepper during the first quarter of the current fiscal posted a growth of over 45 per cent, the turnover of Indian Pepper and Spices Trade Association registered a sharp fall compared to the same period last year.

While the exports of black pepper grew at a rate of 47 per cent, 40 per cent and 54 per cent in April, May and June respectively, the bourse's turnover slumped by 28 per cent, 18 per cent and 41 per cent during theperiod.

Authorities maintain that the slump was due to the stiff resistance by farmers on the low price offers and not due to anything else.

However, the export growth figures prove that such arguments don't hold water, trade sources say.

A major factor that casts shadow over the over four-decade old exchange was the lack of interest by traders in the wake of recently imposed ban on futures trade by the FMC. "Petty politicking by some members is a major reason for the current plight", a prominent pepper exporter said. Since some members are now striking direct dealers with buyers, they can hold the exchange at ransom, he added.

The commodity market watchdog barred the exchange from opening further contracts beyond August 15 following IPSTA's failure to thrash out a formula that guarantee the contracts entered into with the exchange.

Sources also pointed out to the danger of the increasing off market deals as it would hurt the buyers, growers and the traders in the long run.

The recent wave ofdelivery defaults which left a scar on the reputation Indian trading community abroad could have avoided if the trade was routed through the ICE, the international arm of the exchange which has been in limbo since its incorporation, sources said.