The National Commodity and Derivatives Exchange (NCDEX) is preparing to relaunch pepper futures by the end of June, with the contract likely to emerge as an early beneficiary of the market regulator’s proposed cash-settlement-first framework for agri derivatives, according to sources familiar with the matter.
Pepper futures were among the more actively traded spice contracts on NCDEX in the early 2010s before the exchange discontinued them following a series of quality disputes and delivery-related legal challenges. Many of the legacy disputes linked to the contract have since been resolved, clearing the path for a relaunch.
The exchange has already secured the necessary regulatory approvals for the contract relaunch and put in place warehousing infrastructure in Kerala, which is expected to serve as the base delivery centre.
However, industry sources said the timing of the launch could coincide with the operationalisation of the Securities and Exchange Board of India’s (SEBI) proposed pilot framework allowing certain agricultural derivatives to be introduced as cash-settled contracts before transitioning to physical settlement.
Under the proposal issued in May, contracts would be required to migrate to physical settlement upon crossing specified thresholds related to average daily traded volume or open interest, or after a two-year outer limit, whichever is earlier. The framework is expected to be operationalised shortly, potentially before the end of this month.
The move is aimed at addressing concerns around low liquidity and delivery-related constraints that have hampered the growth of several commodity contracts. Market participants said the framework could prove particularly useful for contracts such as pepper, where exchanges are seeking to build trading volumes and liquidity before scaling up delivery-based settlement.
“For a contract that is being brought back after a long gap, the challenge is not just delivery readiness but attracting sufficient participation from day one. The proposed framework gives exchanges another route to build liquidity before transitioning to physical settlement,” said a person familiar with the discussions.
Sources said that if the new settlement framework is notified in the coming weeks, the pepper contract could serve as an early test of whether a phased approach to settlement can help revive trading interest in agricultural commodities that have struggled to attract volumes under traditional physical-delivery structures.
“The timing is interesting because the framework is expected to be operationalised around the same time. Whether pepper ultimately uses it will depend on the final contours, but it is certainly relevant for contracts of this nature,” said another person familiar with the matter.
The relaunch is also expected to support NCDEX’s efforts to expand its presence in southern India, where spice markets remain active. The exchange could use the opportunity to improve domestic price discovery in pepper, a commodity where global pricing is heavily influenced by Vietnam despite India remaining one of the world’s major producers.
The exchange has been working to broaden its commodity offerings and deepen its presence in agricultural markets after a prolonged period of regulatory disruptions across several farm commodity contracts. NCDEX did not comment on queries.
Published on June 9, 2026
