NCDEX (National Commodity Derivatives Exchange Limited)

The National Commodity & Derivatives Exchange Limited (NCDEX) is an online commodity exchange based in India

It is an important topic for the IAS Exam. This article will talk about the functions and structural organisation of NCDEX. Candidates can also download the notes PDF at the end of this article.

Candidates can visit the UPSC Notes on Indian Economy page now to find topics related to the Economics segment of the UPSC Exams!!

The following links will further help candidates in their exam preparation:

What is the National Commodity & Derivatives Exchange Limited (NCDEX)?

National Commodity & Derivatives Exchange Limited (NCDEX/ the Exchange) is an Indian-based agricultural product exchange a large market share in the agricultural products segment.

It is composed of a Board of Directors with experience in the agricultural products market. The NCDEX main objective os to provide an exchange platform for market players seeking to trade in agricultural products.

It is a public limited company that was incorporated on 23 April 2003 under the Companies Act, 1956, beginning operations on 15 December 2003.

To know more about the Indian Companies Act, visit the linked article.

How is the NCDEX regulated?

The NCDEX is under the regulatory authority of the Securities and Exchange Board of India (SEBI). The exchange is controlled by various laws under the Indian Penal Code such as the Securities Contracts (Regulation) Act, 1956, Companies Act, Contract Act and various other legislations.

NCDEX headquarters are located in Mumbai and offer facilities to its members from the centres located throughout India.

To know more about the Securities and Exchange Board of India, visit the linked article.

What does NCDEX primarily trade?

The National Commodity & Derivatives Exchange Limited has a broad-based array of permitted agricultural commodities that amount to a total of 23 (which is also the highest). These commodities include items such as pulses, spices and guar, which are not traded on any platforms in the global scenario and are economically relevant to India, forming an important component of India’s global trade.

To know more about Agriculture in India, visit the linked article.

Benefits of NCDEX

  1. In establishing and maintaining an online futures market for crops, NCDEX has helped increase market transparency.
  2. The exchange assists Indian farmers in the price discovery process. The NCDEX enables them to price their goods more accurately even if they are not active in the futures market.
  3. Middlemen, who are known as commission agents, previously controlled much of the market information in India. The introduction of online commodity exchanges like NCDEX reduces the cost of price data for farmers by cutting out the middlemen.
  4. Exchanges like NCDEX have also played a key role in improving Indian agricultural practices. By standardizing the quality specifications of various products through contracts, the NCDEX has raised quality awareness. Farmers in India increasingly focus on testing requirements and enacting farming practices that result in consistently high-quality crops.
  5. The NCDEX is still young by some standards, but traders and large market participants are already using contracts to hedge and speculate. This trend is likely to continue as India’s agricultural sector grows in terms of productivity and exports.

Aspirants can check the following links for comprehensive preparation of upcoming Civil Services Exam –

Essential Commodities Act (ECA) National Agriculture Market | e-NAM UNCTAD – United Nations Conference on Trade and Development
Monetary System – Types of Monetary System MSP, Minimum Support Price Exchange Rate Management Options
APMC-Agricultural Produce Market Committee Financial Market Farm Acts, 2020 – Arguments For & Against
Pradhan Mantri Fasal Bima Yojana Securities Transaction Tax NBS | Fertilizer Policy
Commission for Agricultural Costs and Prices (CACP) Agricultural pricing and crop insurance issues Farmers Producers Organisation [FPO]
Operation Greens By The Ministry of Food Processing No-Till Farming; Zero Tillage Rashtriya Krishi Vikas Yojana (RKVY)
National Mission for Sustainable Agriculture Nutrient Based Subsidy Scheme List of Agricultural Revolutions in India
PM-Kisan Samman Nidhi Yojana Agricultural insurance – Schemes and Need Agri-Market Infrastructure Fund (AMIF)

Relevant Questions regarding NCDEX

What is the difference between MCX and NCDEX?

The MCX (Multi Commodity Exchange) of India Ltd is an electronic commodity futures trading exchange. While the NCDEX (National Commodity And Derivative Exchange) Limited is an online multi-commodity trading exchange.

NCDEX – UPSC Notes:- Download PDF Here

How many commodity markets are there in India?

As of 2016, apart from numerous regional exchanges, India has Six national commodity exchanges namely, Multi Commodity Exchange (MCX), National Commodity and Derivatives Exchange (NCDEX), Indian Commodity Exchange (ICEX), National Multi Commodity Exchange (NMCE), ACE Derivatives Exchange (ACE) and Universal Commodity Exchange(UCX).

Candidates can find the general pattern of the UPSC Civil Service Exam by visiting the IAS Syllabus page.

Aspirants can find complete information about upcoming Government Exams through the linked article. UPSC exam-related preparation materials will be found through the links given below.


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