New Delhi: The commodity futures market is expected to rise by 2-3 times in 5 years as investments in commodities is being increasingly considered a safe bet and a better way to beat inflation. 

"Trading in commodities is likely to swell two to three times in volume terms over the next five years....," industry body Assocham said in a statement.

Commodities are increasingly becoming a safe bet from an investment perspective and one of the better ways to beat inflation, said Assocham General Secretary D S Rawat.

At present, the market size of agriculture commodities in India is estimated at USD 281 billion, precious metals at USD 32 billion, ferrous and non-ferrous metals at USD 55 billion, and energy sector at USD 25 billion, the industry body said.

"Commodities outperformed other riskier assets during 2010. Any investment made in commodities now is most likely to fetch handsome returns," Rawat said.

In the 2010-11, returns from futures trading in cotton were highest at 90 per cent, followed by silver at around 85 per cent, agri commodities at 35-45 per cent and gold and copper garnered around 25 per cent returns, he said.

Assocham said that the amendments to the Forward Contract Regulation Act (FCRA) 1952 will lay concrete foundation for participation of banks, mutual funds, foreign investors and other funds in the commodity futures market.

Considering that a majority of Indian farmers are dependent upon rain and growing weather uncertainties due to global warming, Assocham has sought for a weather derivative instrument through an amendment in the FCRA, it said.

 

(Agencies)