NCDEX, Cotton Association of India sign pact to deepen cotton derivatives

India’s leading commodity exchange NCDEX on Tuesday signed a five-year strategic partnership with the Cotton Association of India (CAI) to deepen participation in cotton derivatives and create a more transparent price discovery and risk-management ecosystem for the country’s cotton sector.

The agreement comes at a time when India accounts for 20-23 per cent of global cotton production and nearly 38 per cent of the world’s cotton acreage, but remains a marginal player in global cotton price discovery due to fragmented physical markets and low use of derivatives.

According to an official statement, the Letter of Engagement was signed by NCDEX Managing Director and CEO Vikas Goel and CAI President Vinay Kotak in Mumbai in the presence of Cotton Corporation of India (CCI) Chairman-cum-Managing Director Lalit Kumar Gupta.

The partnership aims to strengthen NCDEX’s cotton derivatives platform, which currently includes contracts for kapas, cottonseed oil cake and cotton wash oil, while promoting futures trading as a transparent risk-management tool for farmers, ginners, spinners, exporters and traders.

“Cotton is central to India’s agricultural economy, yet our derivatives market has never fully reflected the country’s scale of production. This partnership is a deliberate step to build a reliable price benchmark and improve risk management across the value chain,” Goel said.

Kotak said the initiative would help address the lack of a hedging culture in India’s cotton trade through better product design and awareness.

Maharashtra, Gujarat, Punjab, Andhra Pradesh and Telangana, major cotton-producing and processing states, will be key focus areas for awareness and adoption programmes under the partnership.