NCDEX will launch new chilli (teja) contract on Tuesday with an option to take delivery directly from the sellers’ godown. This will significantly save transportation cost.

Buyers can now be rest assured on quality of goods delivered meeting contract specifications since it entails compulsory quality check by exchange-approved assayer at the time of settlement, said NCDEX in a press release on Monday.

The hybrid chilli teja contract is launched with Khammam (Telangana) as the delivery centre and Guntur (Andhra Pradesh) as the additional delivery centre.

The direct delivery mechanism is similar to the practice followed in the physical market. It essentially requires the buyer to arrange for assaying by the exchange-approved assayer at the seller’s warehouse and lift the goods directly from the warehouse. If the goods tendered for delivery fail to meet the contract specifications, it would constitute a seller’s default and penalty is levied as per the rule book, it said.

Samir Shah, Managing Director, NCDEX, said the chilli teja variety constitutes about 35 per cent of the total chilli production in India and is very popular among the processors, exporters and consuming industries.

“With the NCDEX prices being a benchmark for the trade, the modified chilli contract which includes direct delivery would be beneficial to the trade and ensure consistent quality supply,” he said.

Chilli is an important cash crop in India and about one million farmers are engaged in the production of this crop in Andhra Pradesh, Madhya Pradesh, Karnataka and Tamil Nadu.

This commodity constitutes 40 per cent of the total spice exports from the country volume wise and 20 per cent value wise.

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