At this juncture, with commodity exchanges battling uncertainty over trading agri-commodities, experts say that passing the FCRA Amendment Bill would help revolutionise the sector by bringing in more participation and providing depth.
The Bill to amend the Forward Contracts (Regulation) Act has been slated to be taken up during every session of Parliament since 2005, but has never been tabled. The delay, according to experts, is only harming the concern of the farmers, the most important stakeholders in an agriculture-dependent country like India.
A draft Bill on FCRA amendment should propose strengthening the Forward Markets Commission (FMC) by setting up a general fund for its financial autonomy and giving it administrative freedom. The Bill should define commodity derivatives and futures contracts to provide for regulation, said Shyamal Gupta, head of institutional business, Kotak Commodity Services Ltd.
The Act should remove prohibition on options. Commodity options are useful tools for risk management and provisions regulating forward contract should also be made applicable to options in commodity, Gupta added.
According to Naveen Mathur, head, Angel Commodities, the amendments would bring in the much needed liquidity and depth to the sector and help setting up an efficient delivery platform.