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PRESS TRUST OF INDIA
Sept 20: Dollar-denominated trading will not help improve trade turnover at the International Pepper Exchange in Kochi, Spices Board chairman V Jayashankar said last week.
"Nothing will change if trading is allowed in dollar. It is not the panacea. Exchange needs a multi-drug therapy," he said while addressing a workshop on commodity futures market in New Delhi.
Jayashankar's views assume significance in the wake of finance ministry considering a proposal from the Indian Pepper and Spices Trading Association (IPSTA), which runs the pepper exchange, to allow trading at the bourse in dollar.
Government has allowed trading in dollar at the proposed International Castor Oil Exchange, being set up in Mumbai, and the decision is also likely to apply to the Pepper Exchange, functioning with a poor turnover since it began trading in November last.
Trade circles feel allowing trading in dollar would lead to better foreign participation in international commodity exchanges in the country.
"Government willhave to remove restrictions on repatriation on money first. This can make the pepper exchange more successful," he said.
Currently, foreign participants would have to obtain income tax and Reserve Bank of India (RBI) clearance to repatriate their money, he said.
Jayashankar said foreign participants could be asked to file an annual return on money repatriations and such a decision could help in the exchange taking off.
"The current procedures on money repatriation is very complicated," he said.
The Pepper Exchange virtually has no foreign participation and its trade turnover is around 600 tonnes a day.
Timing of inauguration of pepper exchange was also not right as pepper prices were ruling at a record high, he said.
Stating that participants in Pepper Exchange were limited, he said it would have to attract large number of buyers and sellers. However, in view of futures trading in pepper, the price fluctuations due to demand and supply were minimum as compared to some other commodities likecardamom.
Jayashankar also compared price fluctuation between turmeric and chilli and said in view of a futures functioning for turmeric in Sangli, Maharashtra, the price fluctuations were minimal.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
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