Delivering his views at the concluding workshop of the World Bank-sponsored IDF on Commodity Exchange Development programme in Mumbai last week, Mr Rutten said: "A new mindset is crucial to move India's commodity exchange industry and to learn from the best international practices".

In this direction, Rutten said a continued favourable approach from the government is necessary. "The speed of change in India's commodity exchange sector over the past few years has been fast, but still not fast enough. Decades of lost time have to be recuperated by both the government and the commodity exchanges".

According to Mr Rutten, the government policy framework has improved, but further improvement is necessary and the FMC needs further empowerment, including developing new areas of regulations (brokerage, anti-manipulation).While the FMC needs to be strong on two vital aspects - budget and regulatory powers - it is important for the government to drastically change commodity marketing practices.

"The government needs to stop movement controls within states and the like, while also incorporating more efficiency in procurement and sale of commodities through commodity exchanges".

The Internet is fast bypassing international borders. Also, the World Trade Organisation (WTO) obligations will make it virtually impossible for India to return to a closed national development model. Pressures from within the financial sector and commodity industry will build up to create an efficient financial environment for commodity trade".

Comparing the developments of futures trading between the US and India, Rutten said: "Until the 1950s, the developments in the two countries ran more or less in parallel, but diverged thereafter".

Right from the 1950s till the '90s, in the US, there was industry consolidation and professionalisation, when a new and stronger regulatory mechanism was put in place. Throughout these years, the futures trade became truly international, over-the-counter trade competing with exchanges' futures trade and from 1998 onwards, existing OTC exchanges started converting to electronic mode.

But in India, "very little happened", the futures industry was repressed during much of the period up to the mid-1990s. So, while in the US the industry innovated, and became stronger, in India, it was struggling to survive".

"Stop looking at the past and be proactive," Rutten said, addressing both the government and the exchanges. "One of the most important things for India is that it will not take the same long time to adapt futures industry as in the US."

This is due to two reasons, Rutten said: One, The internet has been changing the rules of the game, removing the virtual monopoly of exchanges and brokers.

Two, these changes will have a considerable impact on the brokerage margins charged by brokers. In the US and Europe, margins have fallen by 80 per cent over the last decade. With globalisation, Indian brokerages will have to compete with Western low-cost systems and procedures - either because Western companies will enter the Indian markets or because some "brokerage leaders" in India will adopt these techniques.

The low-cost online system and easy information availability will change the scenario faster than witnessed in the developed markets".However, in order to ride the waves of changing times, it is necessary that the government create more efficient agricultural markets, which has the potential to benefit the mass of India's population both farmers and poor consumers.