Indian commodity exchanges will start sugar futures from 27th December, the regulator said, initially launching six contracts as the country revives exports and the government looks for ways to moderate food price inflation.
India had banned trade in sugar futures in May 2009 for six months when prices were rising as it faced shortages. The government extended the ban until the end of September, but then allowed it to lapse.
"We have allowed them (exchanges) to start sugar futures from Monday. We have given them permission to launch six futures contracts from January to June," B.C. Khatua, chairman of the Forward Markets Commission, told Reuters.
India, the world's second-biggest producer after Brazil, was a large importer of sugar in the past two years as farmers switched to other more profitable crops and a severe drought hit cane output in 2009.
This year, production is expected to be over 25 million tonnes in the new season that began on Oct. 1, higher than domestic demand of around 23 million tonnes, industry officials have said, after a normal monsoon led to a larger cane crop.
As a result, India has already allowed unrestricted exports of 500,000 tonnes of sugar and the market expects more overseas sales as the country swings back to a surplus.