India has to become a global hub for commodities

Updated: Jan 31 2005, 05:30am hrs
After being headless for nearly two years, the commodities market regulator, Forward Markets Commission (FMC), has finally got a chairman. S Sundareshan takes charge at a crucial juncture when the Commission has to adapt itself as a regulator catering to a rapidly expanding commodities market. The new chairman is upbeat about his assignment and says the FMCs structure needs radical changes. In his first media interview, to Sangita Shah of FE, after taking over as chairman, Mr Sundareshan elaborated upon the need for FMC to beef up its infrastructure to effectively regulate the booming commodities markets in the country. A civil servant belonging to the Kerala cadre, Mr Sundareshan, who has an MBA from the University of Leeds, dreams of bringing the 40-year old regulator at par with international levels. He has had back-to-back meetings with various honchos of the government machinery, state-owned enterprises, regulators and exchanges to get cracking on his job as soon as he took charge a little over a week ago. Excerpts:

You have handled diverse assignments in your career. How do you find your new assignment
I am extremely happy to be here. Forward Markets Commission is not something which most government officials would be familiar with. But serving in Japan (in the Indian embassy) gave me exposure to this sector. I am not an expert but I am convinced that forward markets are critical to the country and it is just about to establish itself in a major way.

You must be aware of the proposal to converge FMC and Sebi. What would be your approach towards this issue
I certainly am not going to be bogged down by such measures. That is a decision the government has to take and I am here to strengthen the FMC. Whether FMC converges with Sebi or whether it remains independent, the strengthening of the regulator is a must, a priority issue.

What are the steps you have initiated towards strengthening the FMC
First and foremost, we have to upgrade the human resource aspect as well as technology. I have already had a round of meetings with the officers and have granted permission to install computers on the desk of economic officers and above rank.

We are aiming towards a paperless office, and to achieve that, we would be spending a few crore of rupees. We will also have local area network for FMC offices so that communication between the various departments within and across offices speeds up.

We have also hired a technology consultant for the implementation of our technology upgradation programme.

How will you tackle the human resource crunch
We have already advertised in order to recruit 39 officers. Applications have been called for, and we will finalise candidates by March-end.

There are apprehensions that there will not be enough space in the office to accommodate the increased staff strength. However, I have surveyed the place and I dont see any difficulty. Moreover, we are also looking for a larger office and I think by the next financial year, we will be equipped with both technology and human resources.

FMC is also lacking the powers to actually regulate the new age commodity exchanges. There have been problems with surveillance. FMC does not even have connectivity with the online national exchanges. There are no exchange terminals with the FMC to monitor the basic price movement. What do you propose to do about this
I am aware of the surveillance issue and FMC does lack certain powers. However, many reports have been submitted in the past for granting more teeth to the regulator. I am sure the government is working towards it. Meanwhile, we are also in the process of obtaining the best software available for monitoring the online exchanges.

However, I must add that we have hired a legal consultant as well. The consultant will help FMC in identifying the grey areas and offer suggestions.

Where do you think Indian commodities stand in the international market
India has to be a global hub for commodities. There are certain commodities, such as gold where, despite being the largest consumer, India has no say. India must become a major global hub and there should be a situation where no market can dictate terms.

How do you see the role of FMC henceforth
Forward Markets Commission has been facilitating the development of the commodities market in India and the exchanges have done phenomenally well in the last couple of years. We are committed to further development.