India allowed futures trading on Thursday in 54 more commodities including rice, wheat, bullion and other metals, a move traders said would help them manage risk in a country where commodity prices fluctuate wildly.

Futures for about 40 commodities, including several oils and oilseeds, sugar and turmeric, are already traded on 21 commodity exchanges in the country.

"The cabinet committee approved the removal of prohibition of futures trading in 54 commodities," a government spokesman said.

The list includes silver, copper, zinc, lead, tin, cotton yarn and cloth, raw jute, animal fodder and several coarse grains.

"The decision paves the way for bullion futures exchanges to be set up and opens a window for local traders to hedge risks," said Nayan Pansare, a senior official at trading firm Inter Gold Ltd.

Commodity prices in the country are very volatile due to several factors such as unpredictable weather, huge inventories and the dependence on imports.

Nearly two-thirds of arable land in India, a country of more than a billion people, is unirrigated and depends on rain.

India, the world's largest gold consumer, imports nearly 70 per cent of the 700 to 800 tonne of gold it needs each year.

The country also has nearly 50 million tonne of grain stocks after bumper harvests in the past few years.