On the side lines of the MCX foray in to cotton future trading, Textile Excellence had a brief discussion with Sumesh Parasrampuria, Director-Business Development, MCX. Here is the brief of the conversation
Why will MCX not fail, considering the competition around?
In this format, we have representation from across the cotton value chain. Stakeholders have come together voluntarily and initiated this move. We ensured that there is representation from producers and consumers. We started early this year. Through a series of meetings, the NAC devised the cotton futures contract. So, this contract is by the stake holders and for the stake holders. Considering the volatility of last season, this futures contract was the need of the hour. We have entered this commodity space, in the face of a very volatile market condition of the previous cotton season. If China and USA, two of the top cotton producing countries, can have their own futures market, then why not India? We are anyways going to be the world’s largest producer and exporter of cotton. So, I am hopeful that MCX futures contract will be a success story.
Why did MCX not enter this space earlier?
The need was not there earlier. But our perception changed, thanks to last year’s volatile conditions. Trade was hit. There was a trust deficit. Everybody burnt his fingers last season. There was credit default of the scale never seen before. Futures contract is all about price discovery and risk management. The MCX platform delivers both.
Can you throw light on your roadmap?
We want MCX cotton to be the benchmark futures contract. We are also looking at other commodities in the textile value chain. But for now we are keen to consolidate our position in the cotton space. Going forward, if the trade demands, we would be keen to move into other commodities. We would also like to bring on board the framer community. We are in talking to various aggregators (federations). After all, the benefits of futures contract must percolate down to the cotton growers.