NCDEX-IMD MoU: India's First Weather Derivatives

1. Core Agreement :

• Parties: National Commodity & Derivatives Exchange (NCDEX) + India Meteorological Department (IMD).
• Objective: Develop India’s first weather derivatives (e.g., rainfall-indexed futures) to hedge climate risks.

2. Key Features & Significance:

• Product Design:
  • Uses IMD’s high-precision historical/real-time weather data (e.g., rainfall, heatwaves).
  • Location-specific & seasonal contracts aligned with crop cycles.
• Purpose:
  • Hedging tool for farmers, FPOs, agri-traders against erratic weather (monsoon failure, unseasonal rains).
  • Extends to allied sectors (transport, tourism, logistics).
• Innovation:
  • Market-based solution for climate resilience → Reduces dependency on crop insurance schemes (e.g., PMFBY).
    3.Main Institution:
• NCDEX: India’s largest agricultural derivatives exchange (regulated by SEBI).
• IMD: National weather agency (est. 1875) → Mandate: Agro-meteorology, disaster warnings.