The Cotton Association of India, earlier known as the East India Cotton Association, was the first to be given permission to launch cotton futures in 1997. This was after the then National Democratic Alliance Government decided to resume futures trading that had been banned since the late 1960s.

Now, the association wants to get out of trading of any sort, be it futures or forward delivery.

A resolution to this effect was passed by the Cotton Association of India (CAI) extraordinary general meeting recently. It was decided that CAI should be derecognised as a trading body. The emergence of a vibrant online platform for futures trading in cotton has led to lack of trading interest in the CAI platform.

Mr M.B. Lal, CAI board member appointed by the Forward Markets Commission and former Chairman of Cotton Corporation of India, said a resolution was passed for derecognising CAI as a trading body at a recent special general body meeting.

The move will enable CAI to come out of the purview of the commodity market regulator, Forward Markets Commission. The association has not been able to register even a single trade for the last few years, according to data available on the FMC Web site.

Besides CAI, the other single commodity regional exchanges that have not registered any trade include the Surendranagar Cotton & Oilseeds Association and Sangli-based Spice & Oilseeds Exchange , according to FMC data.

The CAI and the Spice & Oilseeds Exchange are recognised as permanent members. It will now require the Ministry of Consumer Affairs’ permission for de-recognition.

Earlier, the board had approached the Forward Markets Commission for de-recognition, but was advised by the regulator to get the approval of the members at the general body meeting.

CAI has about 400 members from the all segments of cotton trade and textile industry including mills, growers, ginners, brokers, merchants, importers and exporters. It was established in 1921 to facilitate cotton trade and regulate cotton futures in Mumbai.

Currently, cotton futures are traded on online commodity exchanges such as the NCDEX and MCX.

The Association played a pivotal role in development and promotion of cotton in India. In 1952, CAI was granted permanent recognition for conducting futures trading in cotton throughout the country until the ban. However, forward trading was allowed as Non Transferrable Specific Delivery contracts.

The East India Cotton Association was renamed Cotton Association of India in August 2007. Members of the Association used to negotiate over phone and book their consignments in other cotton growing States such as Gujarat, Andhra Pradesh and Tamil Nadu. Seventeen regional cotton associations and four co-operative marketing societies representing all cotton producing regions are affiliated with the CAI and have representation on its Board as associate directors.

>suresh@thehindu.co.in

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