NCDEX and IMD Join Hands for India’s First Weather Derivatives

National Commodity & Derivatives Exchange (NCDEX) signed a Memorandum of Understanding (MoU) with the India Meteorological Department (IMD) to launch India’s first weather derivatives. This new market tool aims to help farmers and related industries deal with the growing risks caused by unpredictable weather, such as rainfall shortage, heatwaves, and unseasonal storms.

What Are Weather Derivatives?

Weather derivatives are special financial tools that help protect farmers, transporters, and other weather-sensitive sectors from climate-related losses. Under this agreement, NCDEX will develop rainfall-based futures contracts using high-quality weather data from IMD. These contracts will be location-specific and season-based, matching real farming conditions.

This marks the first time such a product will be introduced in India, helping build climate resilience in rural areas.

Voices from the Leadership

Arun Raste, Managing Director & CEO of NCDEX, said this step opens a “new era in commodity markets.” He explained that with changing climate patterns hurting crops and incomes, market-based solutions like weather derivatives can help people prepare better. He added that this innovation could also benefit industries like tourism and transport.

Dr. M. Mohapatra, Director General of Meteorology, IMD, said the IMD has always supported agriculture and disaster warning systems. He added, “With this MoU, IMD’s data can now also support financial stability by helping farmers and other sectors deal with climate impacts.”

Training, Research, and Expansion Plans

The partnership will not only create new weather-indexed products, but also support,

• Training and workshops for farmers, FPOs (Farmer Producer Organisations), and traders
• Joint research to improve understanding of weather risks
• Better market tools to help in price and risk management
• The weather derivatives will be backed by both historical and real-time weather data, making them highly reliable.

About the Partners

NCDEX is India’s largest agricultural commodity exchange. It offers a platform for price discovery and risk management for farmers and traders. Since its launch in 2003, NCDEX has played a major role in building a modern, tech-based agri-market system.

IMD, founded in 1875, is the national weather agency. It provides forecasts and warnings related to weather and natural disasters. It supports key areas like agriculture, aviation, irrigation, and oil exploration, and helps protect life and property from extreme weather events.