SEBI Chairman Tuhin Kanta Pandey on Saturday, December 20, said the capital markets regulator is actively engaging with the GST Council to address long-standing GST-related issues impacting commodity trading on exchange platforms.
Speaking on regulatory priorities, Pandey noted that GST hurdles have been affecting delivery and settlement mechanisms in commodity markets, limiting broader participation. "We are working with the GST Council Secretariat to unlock market participation," he said, emphasising that clarity on taxation is critical for the growth of both agricultural and non-agricultural commodities.
According to the SEBI chief, resolving GST-related challenges will help strengthen physical delivery systems and improve liquidity across commodity markets, including gold. Clear and consistent tax treatment, he said, would encourage greater participation from market participants and deepen India's commodity ecosystem.
Proposal for a Single Investor Protection Fund
Pandey also revealed that SEBI is examining a proposal to create a single investor protection fund (IPF) covering all exchange-traded products. Currently, separate IPFs exist for equity and commodity segments, which the regulator now wants to simplify for better efficiency and ease of understanding.
"Our investor survey highlights a strong need for targeted awareness in commodity derivatives," Pandey said. SEBI is intensifying its outreach programmes aimed at farmers, farmer producer organisations (FPOs), exporters, MSMEs and students of agricultural colleges.
He added that MSME-focused outreach initiatives involving FPO representatives are helping SEBI identify key access and participation challenges. To support this effort, the National Institute of Securities Markets (NISM) will train educators to deliver structured commodity market awareness programmes across the country.
Focus on Regulated Gold Products
Highlighting SEBI's efforts to strengthen investor protection in the gold market, Pandey said the regulator offers multiple regulated gold investment avenues, including commodity derivatives, gold ETFs and electronic gold receipts (EGRs).
"These regulated gold products ensure investor protection," he said, urging investors to transact only through SEBI-regulated platforms. While EGRs were introduced to create a transparent and regulated gold market and position India as a global price discovery centre, Pandey acknowledged that their adoption has been limited so far.
"We need to review the framework, including GST-related challenges," he said, indicating that taxation issues may be one of the reasons behind the slower uptake of EGRs.
Commodity Markets High on SEBI's Agenda
On recent regulatory measures, Pandey said SEBI has reduced the lot size of nickel contracts following their relaunch in August 2025 to attract smaller market participants. As a result, nickel futures have recorded higher trading turnover compared to the previous fiscal year.
Reaffirming SEBI's commitment to the sector, Pandey said commodity markets will continue to remain high on the regulator's regulatory and developmental agenda. SEBI has also set up expert working groups to deepen agricultural and commodity derivatives markets.
Margins, position limits and delivery norms are currently under review, he said, while ensuring that market integrity and investor protection are not compromised.
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