Union Finance MinisterP Chidambaram in his Finance Bill for the year 2008 proposed the introduction of the Commodity Transaction Tax (CTT) in the Indian financial markets. This article takes a close look at the impact of CTT on the commodity derivatives market .

India is an agricultural economy and commodity market in India is more than 125 years old.. But the foundation for start of futures trading in commodities in India was laid with the announcement of the National Agriculture Policy in July 2000. It was proposed to allow futures trading in agricultural commodities for risk management and price discovery. Futures trading in all the commodities was started in 2002 with the establishment of National Multi Commodity Exchange of India Ltd. (NMCE), which was later on joined by National Commodity and Derivatives Exchange Ltd. (NCDEX) and Multi Commodity Exchange of India Ltd. (MCX).

The National Multi Commodity Exchange, located in Ahmedabad, was promoted jointly by Central Warehousing Corporation (CWC), National Agricultural Cooperative Marketing Federation of India (NAFED), Gujarat Agro-Industries Corporation Limited (GAICL), Gujarat State Agricultural Marketing Board (GSAMB), Neptune Overseas Limited (NOL) and National Institute of Agricultural Marketing (NIAM).

The National Commodity and Derivative Exchange started its operations on December 15, 2003. It was established jointly by National Stock Exchange of India Limited (NSE), Life Insurance Corporation of India (LIC) and National Bank for Agriculture and Rural Development (Nabard). It is located in Mumbai.

Portfolio Organizer Magazine, Commodity Transaction Tax, Indian Financial Markets, Commodity Derivatives Market, Agricultural Economy, National Agriculture Policy, Agricultural Commodities, Risk Management, National Multi Commodity Exchange of India, Central Warehousing Corporation, CWC, National Agricultural Cooperative Marketing Federation of India, NAFED, Gujarat Agro-Industries Corporation Limited, GAICL, Gujarat State Agricultural Marketing Board, GSAMB, Neptune Overseas Limited, NOLand National Institute of Agricultural Marketing, NIAM.