More than any other time, this century promises to make commodities central to global economies. India can be at the centre of the commodities universe??as a large producer and consumer of several commodities and the commodity markets can help make that happen. Our commodity exchanges are an important tool in our quest to globalise our commodity markets. In India, the last six years have seen the commodity futures markets grow by leaps and bounds, yet there is a long way to go?? as a benchmark we are now at 1/4th of equity market volumes and this market can easily go to 4 times of equity market volumes if not more.

The intended benefits of price-discovery and risk mitigation are already being derived from the exchanges but, obviously, deeper penetration and increased industry participation will make these twin advantages all the more efficient.

Futures are indicators of future demand-supply and can be constructively used. There are several benefits of being one of the largest futures markets of the world, especially in the commodities which impact us directly and we should strive to be price-setters in them for long-term strategic benefits. Several steps need to be taken and many of us are endeavouring to define them clearly as well as suggest a practical roadmap. Though there are numerous issues, some may be more important than others.

Since commodities are accepted as assets worldwide, commodity derivatives should be treated on par with equity derivatives i.e. the profit-loss should not be termed speculative but rather as business income. The investor community must be part of this market.

Secondly, at the cost of repeating requests pending for several years, we should allow banks and mutual funds to invest in commodities ?? maybe a restricted list of commodities ?? and simultaneously increase client limits so that depth and liquidity can be created.

Thirdly, a single clearing corporation on the lines of developed countries will go a long way in ensuring maximum participation ?? so a client will have a single margin which he can allocate at will to whichever exchange he wants. Therefore we have to think global and act local.

We have a situation today which is opposite to the global markets i.e. demand in India is running ahead of supply. This is yet another timely opportunity to influence prices & should be taken by promoting our commodity markets ?? be it for metals or agri business. Linking farmers with commodity exchanges is crucial here as India has a large agricultural base.

Options trading in commodities should be allowed for their sheer operational efficiency and reduced financial commitment of the farmer. Options, when bought, allow hedgers to partake the upside and exit cashflow issues.

Sixth, allow 100% FDI in commodity broking and increase single-investor caps in commodity exchanges. Best-in-class practices will flow to India only if higher stakes are allowed.

Finally and importantly, a single regulator for the commodity ecosystem will benefit all. Therefore regulation of futures exchanges, spot exchanges and warehouses should be under a single regulator. Only a regulator with the ?big picture? can make the right calls.

Each of these points implemented in isolation will make a difference; implemented together will take our plan of being a major global commodity market participant to its logical conclusion in a tumultuous but short period with long-term gains all round.

(The author is president, Religare Commodities)