"In every part of the world, the trend today is to have fewer and fewer exchanges," civil supplies and consumer affairs secretary NN Mookherjee was quoted as saying in a speech at the inauguration of domestic cotton futures trading.

"A beginning can be made in this direction in our country by going in for multi-commodity exchanges," he said.

Mookherjee did not attend the conference. His speech was presented by Vijay Aggarwal, chairman of the Forwards Markets Commission (FMC), India's commodity futures regulator.

The FMC works under the ministry of food and consumer affairs.

Domestic cotton futures trade was launched on Saturday when the East India Cotton Association (EICA) started trading in the Indian Cotton Contract at a formal inauguration.

Mookherjee was quoted as saying that thegovernment was open to recognising one exchange for trading various commodities.

"We would have no objection to this approach, provided an exchange is otherwise well-equipped to handle several commodities," he said.

India could also see the merging of a few commodity exchanges, he added.

"Our exchanges have till now been far too individualistic, but there is no reason why they should continue to be so." India has 24 recognised exchanges in which futures trading is conducted.

There were a few states where trading was being done in the same commodity in many exchanges and this needs to be changed, Mookherjee said.

"Having a large number of exchanges trading the same commodity, results in spreading of liquidity and volumes and impairs the efficacy of the price-discovery and risk management functions of futures markets," he said.

The setting up a National Commodity Exchange is seen as revolutionising the Indian commodity futures market.

Such an exchange would organise trading of all permittedcommodities, have a vast membership spread out in the country, provide facilities for screen-based trading and guarantee the performance of contracts, Mookherjee said.

"While such an exchange could be the outcome of a series of mergers between existing exchanges, it is also possible to conceive of the National Commodity Exchange as an entity which comes into existence independently," he said.

The Indian government banned most futures trading 30 years ago to iron out the impact of sharp price fluctuations, but decided to allow it in six minor commodities in 1993.

Since then permission has been given for five more, including cotton, soybeans and coffee.

In June, India's domestic coffee futures exchange started trading in the southern city of Bangalore.