Report from an American consulting firm says the continued procrastination from the Indian government to allow the entry of foreign institutions investors in commodity futures exchanges is affecting the market.
The report has also warned that the continued delay in permitting foreign ownership in commodity exchanges would cause potential investors to lose interest in India.
According to the US-based Financial Markets International, India's ban on foreign funds into commodity futures market is these days benefiting the Chinese commodity markets.
It pointed out that the cumulative effect of foreign investment is undeniably positive. "Limiting foreign investment in India's commodity futures exchanges
would deny a key impetus to a rapidly growing sector of the Indian economy," the report said.
It said India could immensely benefit from foreign direct investment in commodity exchanges. They could include job creation, technology diffusion, knowledge transfer, better agricultural infrastructure for farmers, and higher revenue generation for market participants.
Already, India's largest commodity bourse Multi Commodity Exchange (MCX) has received commitments from the New York Mercantile Exchange, the New York Stock Exchange Group, Merrill Lynch and Citigroup to take 5 per cent stake each in the exchange.
Also, Intercontinental Exchange has picked up 8 per cent shares on the National Commodity and Derivatives Exchange.