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Indian regulator asks govt to permit gold futures

India's Forward Markets Commission, which regulates trading in commodity futures, has recently recommended to the government to introduce gold and silver futures, its chairman said on Thursday.

India, the world's largest gold consumer, imports about 70 per cent of its total requirement of nearly 850 tonnes a year.

"We have also written to the government to permit futures trading in several other commodities such as rubber, onion, gram and chillies," Anand Kumar Bhatt told Reuters, but did not say when he expected the government to take a decision.

In February, the government had said it would expand futures trading in a phased manner to all commodities.

India allows futures trading in about 40 commodities, including several oils and oilseeds, sugar and turmeric. Futures in grains and bullion are banned.

Only domestic players are allowed to trade in commodity futures in the country.

Bhatt said the commission had allowed the Bombay Commodity Exchange about 10 days ago to start futures trading in tea, which the government recently permitted.

The government approves commodities in which futures trade can begin. The commission then permits exchanges, after examining their performance and geographical reach, to offer trading in that product.

India prohibited futures trading in most commodities in the 1970s, when domestic production of farm products was not enough to meet local demand.

The government held the view that futures trading would promote speculation, which could push up prices, and that this would benefit a small group of traders and not farmers.

In the 80s, it began reintroducing futures in select farm products.

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