The initiative aims to combine NSE’s experience in operating large-scale derivatives markets with IGX’s role in natural gas spot trading and physical market development. IGX currently facilitates gas trading between multiple hubs in India and plays a key role in pricing domestically traded natural gas. By bringing together these complementary forces, the two institutions aim to create a futures contract that reflects the fundamentals of the Indian market, rather than relying on foreign benchmarks.
According to NSE, the introduction of Indian Natural Gas Futures is expected to benefit a wide range of participants across the energy value chain. These include gas producers, city gas distribution companies, energy producers, fertilizer manufacturers and industrial consumers, as well as traders and financial investors. A domestic futures contract would allow these participants to hedge against price volatility, manage purchasing risks more effectively, and improve long-term planning and investment decisions.
Commenting on the proposed collaboration, Sriram Krishnan, Chief Business Development Officer at NSE, said the discussions reflect the exchange’s broader push to deepen India’s commodity derivatives ecosystem. He said natural gas is emerging as a crucial transition fuel in India’s energy mix and a well-designed domestic futures contract could play a key role in strengthening the market.
Krishnan said a local futures product would increase price transparency and improve risk management capabilities for market participants, while also supporting the development of a credible gas price benchmark aligned with Indian supply and demand dynamics. He added that by leveraging NSE’s market infrastructure and IGX’s expertise in the physical gas market, the two institutions aim to create a futures product that is relevant, liquid and trusted across the gas value chain.
The proposed collaboration also fits in with India’s broader policy objective of increasing the share of natural gas in the country’s energy basket. The government has pushed for a shift to cleaner fuels, with natural gas seen as a bridge fuel in the transition away from more carbon-intensive sources such as coal. In addition, policymakers have encouraged greater reliance on market-based pricing mechanisms to improve efficiency and investment signals in the energy sector. NSE said discussions with IGX are ongoing and the launch of the proposed futures contract would be subject to regulatory approval. The two exchanges plan to work closely with regulators and other stakeholders to ensure a smooth rollout, including contract design, settlement mechanisms and participation standards.
If implemented, the partnership could mark a milestone in India’s commodity markets, potentially paving the way for deeper participation, improved liquidity and stronger integration between the country’s physical and financial energy markets.
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