In value terms, futures trading at commodity exchanges fell to Rs 101.44 trillion in the first twelve months from April 2013 from Rs 170.46 trillion a year ago, the Forward Markets Commission said in a statement on its website.
Trading in gold bullion fell more than 25% to Rs 43 trillion in the year to March 2014, from Rs 78 trillion in the same period last year. Metals volumes fell 46% to Rs 17 trillion, and volumes in agricultural commodities fell 25% to Rs 16 trillion.
The plunge in volumes and lack of fresh capital is expected to cause at least one national-level exchange, the Indian Commodity Exchange controlled by Reliance Capital
The world's second-biggest buyer of gold and second-biggest producer of wheat, India allowed commodities futures trading only in 2003. But enthusiasm has dried up since a scam was unearthed last July at the National Spot Exchange owned by Financial Technologies India, which also owns the largest exchange, the Multi Commodity Exchange
In addition, also last July, India levied a Commodities Transaction Tax (CTT) of 0.01% on trade of all non-agricultural commodities futures and a few agricultural commodities futures, and increased restrictions on imports of bullion.
"The very first jolt was that when CTT was introduced and then the NSEL fiasco," said Haresh Galipelli, vice-president, Inditrade Derivatives and Commodities in Hyderabad.
"We have already seen peaking of retail participation and for the market to reach new level, we need more participation of banks, institutions...."
India has 21 commodity bourses, including six operating at the national level, trading about 80 commodities ranging from gold to carbon credits. Foreigners are still not allowed to trade in futures, but can buy stakes in the exchanges.
"Consolidation will continue in commodity trading unless we pass the FCRA (Forward Contract Amendment Bill) and launch innovative products like options," Galipelli said.
The bill has been pending in parliament for a decade.
