India is making a strategic push to become a global “price setter” in the global metals market, moving away from its long-standing reliance on foreign benchmarks like the London Metal Exchange.

Speaking at the launch of a new report by the Multi Commodity Exchange of India (MCX), Securities and Exchange Board of India (Sebi) chairperson Tuhin Kanta Pandey outlined steps to deepen India’s commodity derivatives market and establish benchmarks that reflect India’s economic might. The effort, he said, is designed to align with national priorities such as the “Make in India” and “Critical Minerals Mission” initiatives.

“For decades, our physical metal markets were largely dependent on foreign price benchmarks to transact,” Pandey said. “This is India’s endeavour to shift from ‘price taker’ to ‘price setter’ and from reliance to self-reliance.”

Metal power

Pandey’s address coincided with the unveiling of MCX’s ‘Industrial Strength: Financial Depth’ report, which estimates India’s industrial metals market at roughly ₹20 trillion, or 6% of the nation’s GDP. The report highlights the growing importance of base metals like aluminum, copper and zinc in fueling India’s infrastructure and manufacturing ambitions.

Pandey emphasized that a robust commodity derivatives market is crucial for the economy, serving three key functions: enabling real-time price discovery, providing a mechanism for price risk management, and creating transparent benchmarks for the entire physical value chain.

“They are the modern alchemist’s crucible, transforming the risk of price volatility into a manageable variable,” he said.

To achieve this vision, Sebi is launching a new working group for non-agricultural commodities and focusing on a four-point agenda.

Four-point plan

First, the regulator will enforce real-time margin collection and continuous monitoring to ensure market safety. Second, it will encourage exchanges to launch new products and foster the growth of peripheral services like warehousing and logistics. This includes developing financial instruments to de-risk the exploration of critical minerals like lithium and cobalt, essential for India’s green energy transition. The recent launch of a deliverable nickel contract on the MCX was cited as a key step, as nickel is almost entirely imported.

Third, Sebi will focus more on increasing participation from small and medium-sized enterprises (SMEs) to “truly de-risk our industrial backbone”. Sebi is also examining a proposal to allow Foreign Portfolio Investors (FPIs) in certain non-agricultural commodity derivatives and will engage with the government to consider allowing banks, insurance companies, and pension funds to trade in these markets. Fourth, commodity-specific brokers will be included in a common reporting mechanism by the end of December 2025, in an effort to simplify compliance. Sebi is also committed to resolving GST-related challenges for participants and running targeted awareness programmes.

Pandey stressed that these reforms are crucial in an era of geopolitical uncertainty and supply chain disruptions. A robust domestic derivatives market, he argued, acts as a “powerful shield” that allows Indian producers and consumers to hedge against global price shocks.