India needs exchange for carbon credit.

India, a leading seller of carbon credits under the clean development mechanism (CDM) of the Kyoto protocol on climate change, does not have an internationally-linked domestic exchange for the undertaking spot and futures trading in carbon credits. The Indian Clean Technology based projects are denied full financial benefits from this multi-billion dollar global business that is expanding. What is worse, the valuation of certified emission reductions of Indian origin is further discounted because of the relatively low financial and credit rating of the Indian companies concerned, most of which are small in size. In its present form, the Forward Contracts (Regulation) Act, 1952, which governs futures trading in commodities, does not allow trading in CERs since it is not clear whether CERs can be deemed as deliverable goods. The confusion over the exact nature of carbon credits deters the commission from giving its consent to launch of futures contracts, putting the ball firmly in the government’s court. The problem is not in setting up the regulator. The environment ministry already has a cell for giving the host country approvals for carbon trading. This can also function as the regulator for exchange-based transactions. The decision, ultimately, has to be taken by the government.