The official said that the Tea Board had some sort of unofficial preliminary discussions with NSE, which had reportedly expressed interest in entering the futures market for commodities. He said that NSE's entry into tea futures would augur well for the industry as the bourse was professionally managed. The Tea Board would also interact with the various tea auction committees for studying the introduction of futures trading in the commodity, which had been strongly recommended in the project report prepared by Bangalore-based Indian Institute of Plantation management. About the time-frame regarding introduction of futures trading in India, a official said it depended upon the licensing authority, which is the ministry of consumer affairs. Although the Tea Act did not mention anything about futures, it did specify about price stabilisation, he said.

Futures trading would help producers to hedge against risks of price volatility, which was particularly true for the small and medium tea growers of north and south India.

However, there were constraints to introduction of futures trading in tea, the report said, adding that the first one was the difficulty in determining a basis grade for select categories.

The second constraint was in the form of the dependence of intra-grade quality on natural and non-natural factors. The report said that the probability of defaults arising, from non-fulfillment of quality specifications is widely viewed by the industry as potentially high.

The last constraint was the absence of a precedence of futures trading anywhere in the world.

This required careful policy initiatives on the part of the Centre and the industry. The auction centres would also act to provide a complementary market infrastructure to tea futures, the report said.