Introduction

The commodity market in India has a rich and evolving history. It is deeply intertwined with the country’s agriculture and economic development. Commodity trading has come a long way in India. It started with ancient barter systems and has evolved into modern electronic trading. This journey shows how much the economy has grown.

The history of the commodity market has its roots dating back to the nineteenth century. Many regulatory and several technological changes have reshaped this segment. Interested in knowing more about this? Continue reading to find out-

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The Foundation- Ancient Trading Traditions

If you wish to understand the history of the Indian commodity market, you would have to go back to its roots of it. Commodities have played a big role in the ancient Indian economy. This includes goods like spices, textiles, gold, gems, silver and more. Trade was enabled globally through land and sea routes. This includes the trading network across the Silk Road and the Indian Ocean.

Long before formal exchanges existed, India’s economy thrived on the fundamental principles of barter trade. They were exchanged directly without using any other medium or money. Farmers or herders often traded crops or livestock for metal tools, textiles, and pottery. They figured out the value of their goods, then each side made an offer.

The Pre-600 CE era saw ginger, pepper, turmeric, gems, cotton, etc, being traded along with agricultural products.

Mathura, Puhar, Ujjain, Taxila and Pataliputra are some of the major ancient Indian trade centres that existed. The Indus Valley Civilisation also traded with Mesopotamia, Egypt and many other regions. They dealt with pottery, textiles, metals, agricultural products, etc.

Standard coinage and weights helped the Gupta and Mauryan Empires create strong economies. They had many markets and trade routes. Gold, pearls, diamonds, and other precious stones were among the goods traded along the Deccan route, also known as the Dakshinapath.

Pre-colonial and Mughal markets

The history of commodity exchange in India is closely linked to the Mughal era and the pre-colonial period. Under Mughal rule, trade in the commodity market grew rapidly, and market systems became more structured.

Many trade routes were set up and expanded. They connected important commercial centres like Ahmedabad, Surat, Agra, Calicut, and Bengal. Silver rupees, copper dams, and gold mohurs were used for trading. Coins were also exchanged for hundis, which served as negotiable bills of exchange. During this time, some locations used Maldivian cowries as currency.

The weights and measures system helped fair trade. Also, moderate tariffs on goods made trading more profitable.

The Colonial Era- Birth of Structured Trading

The formal commodity market in India began taking shape during the British colonial era. The British rule led to the birth of several policies that changed the commodity trading history in India into a more diverse economy. India became a major supplier of raw materials and also a market for them.

The first organised exchange, the Bombay Cotton Trade Association was established in 1875. This was done to regulate cotton trading. This was followed by the formation of the Ahmedabad Cotton and Oil Seeds Exchange in 1893.

During this period, futures trading also emerged. The Chamber of Commerce in Hapur was an early platform for futures contracts. It focused on commodities like cotton, oilseeds, and bullion.

Post-Independence Regulations- Balancing Growth And Stability

Independent India in the early years faced multiple challenges. The government saw that regulating commodity markets was crucial. This would help stop excessive speculation and price manipulation. This period marked the introduction of complete regulatory frameworks designed to protect traders and consumers. The Forward Markets Commission was set up in 1952. It became the main regulator for commodity derivatives.

Another important landmark was the Essential Commodities Act of 1955. It was created to ensure the delivery of certain goods. If hoarding or black marketing blocked these deliveries, it would impact citizens' daily lives.

The Renaissance- How did the market revive?

The economic liberalisation marked a turning point for India’s commodity markets. The government saw how vital futures trading is for farmers and traders. It helps with price discovery and managing risks.

The creation of numerous significant commodity exchanges was another facet of modernisation. Here are a few notable ones-

• 2002- The NMCE (National Multi-Commodity Exchange) was founded

• 2003- The MCX (Multi Commodity Exchange of India) was set up in Mumbai, and the NCDEX (National Commodity and Derivatives Exchange) was founded

• 2009- ICEX (Indian Commodity Exchange) was set up

The Contemporary Era- Integration and Innovation

In 2015, a key event took place. The FMC (Forward Markets Commission) merged with SEBI (Securities and Exchange Board of India). This brought commodity markets under a unified regulator

SEBI now oversees the commodity derivatives market. This ensures all participants follow strict rules. These include risk management protocols, investor protection, fair trading practices, and market transparency. The merger has also improved investor confidence and increased market participation.

To conclude

We hope you now have a better idea about the history of commodity market and trading in India. The history shows how we moved from simple barter systems to advanced electronic trading. The market continues to change and evolve. It offers various opportunities for investors to grow their money.

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