The ministry of consumer affairs will soon set up a market development committee for the commodities market under Forward Markets Commission (FMC).

MDC would examine issues ranging from revival of the smaller single or multi commodity exchanges spread around the country to provide expert opinion and advice to the government for formulation of strategies for the future.

According to Sharad Yadav, minister of consumer affairs, food and public distribution, "The government was keen on leveraging the combined efforts of the commodity market institutions to promote futures trading and take it to newer heights in the immediate future."

Dr. Kalyan Raipuria, senior economic advisor in the ministry of consumer affairs, food and distribution, told Business Standard, "The committee will be set up under the chairmanship of member, Planning Commission, with a couple of members from the commodities sector besides members already on the similar body for stock markets under the Securities Exchange Board of India (Sebi)."

MDC was expected to look into liquidity problems faced by regional and smaller single and multi commodity exchanges to ensure that they did not go bankrupt like the regional stock exchanges.

MDC will also consider whether to award futures trading rights in gold, silver, wheat and rice to single and multi commodity regional exchanges besides the four national exchanges.

Interestingly, IIM Lucknow has in an independent report said that smaller exchanges which did not enjoy economies of scale should be encouraged to go in for strategic alliances for trade in contracts and clearing and settlement operations.

There were 29 commodity exchanges in India in all, including four national exchanges - National Commodities and Derivatives Exchange of India (NCDEX) backed by ICICI Bank, NSE, LIC and Nabard, the Multi Commodity Exchange of India (MCX) promoted by Financial Technologies, National Multi-Commodity Exchange (NMCE) and National Board of Trade of Indore.