"We have just now cleared the proposal for domestic futures trade in soyabean, soyabean oil and soyabean cake," civil supplies and consumers affairs secretary N N Mookherjee said.

The Soyabean Processors Association (SOPA) in Indore, Madhya Pradesh, had been permitted to hold the futures trading in soyabean and its products, he said.

However, it would take sometime for the trading to commence as SOPA had to formulate the contracts and regulation norms for the trade. Once the contracts and regulation are in place, the Forward Markets Commission (FMC) will have to give the go-ahead for the commencement of the trade after scrutinising the contracts and rules.

The futures would be held only for soyabean products produced in the country, Mookherjee said. India produces around 60 lakh tonnes of soyabean, which is grown mainly in Madhya Pradesh, Maharashtra and Rajasthan.

Finance minister Yashwant Sinha had announced in the budget that government had decided to allow futures trading in oilseeds and cotton to ensure better prices for farmers.

Regarding other oilseeds, Mookherjee said futures trading in products like groundnut, rapeseed and mustard were either regulated or prohibited under the forward contract regulation act.

A cabinet approval was necessary for removing the regulations on these oilseeds, he said. "We will go to the cabinet soon for allowing futures in other oilseeds," he said.

Asked about international futures exchange in castor oil, he said a delay was being caused in commissioning the trade as formulations of the regulations was taking considerable amount of time. However, the regulation norms for the futures exchange was expected to be submitted to the FMC by the month-end.

Besides setting up an exchange, a clearance house had to be commissioned and a separate corporation had been formed for it, he said. The government would soon conduct an overall review on performance of futures trading in the country in relation to the world bank funds for it, Mookherjee said.

"We will consider how best to strengthen the futures trading and improve it," he added. Mookherjee said commissioning of domestic cotton futures in Mumbai was almost ready.

The FMC had suggested some changes in the trading norms for the cotton futures and it was being carried out. The futures was expected to start functioning by September-end, he said.