National Stock Exchange of India (NSE) has entered into a pact with the Steel Users Federation of India (SUFI) to jointly develop and expand the steel and commodity derivatives ecosystem in India.

“NSE has signed a Memorandum of Understanding (MoU) with SUFI to collaborate on the development and growth of the steel and other relevant commodity derivatives ecosystem in India,” the country’s largest exchange said in a release.

The development comes at a time when the country’s fast-growing steel industry is looking for better tools to manage price volatility. The partnership aims to build a transparent and efficient price-risk management framework for participants across the steel value chain by promoting the use of exchange-traded derivatives, according to the release.

The release noted that the initiative is expected to benefit steel manufacturers, processors, MSMEs, infrastructure companies, OEMs, and other end-users that are increasingly exposed to fluctuations in raw material and steel prices.

Under the agreement, NSE and SUFI will collaborate on product design, industry consultations, market outreach, awareness programmes, and capacity-building initiatives to support the launch and adoption of steel-related commodity derivative products in the domestic market.

The release highlighted that India is among the world’s largest producers and consumers of steel, with the commodity widely used across sectors such as automobiles, engineering, infrastructure, capital goods, and consumer durables.

“The proposed contract is expected to provide an effective hedging mechanism and support improved price discovery for participants across the domestic steel value chain,” it said.

Sriram Krishnan, Chief Business Development Officer at NSE, said the Indian steel industry has matured significantly and there is a growing need for transparent and efficient risk management tools.

“Our collaboration with SUFI is an important step towards building credible and liquid derivatives contracts that address the hedging requirements of Indian steel market participants. NSE remains committed to developing innovative commodity derivative products aligned with the evolving needs of the industry,” he added.

The partnership also reflects broader efforts to deepen India’s commodity derivatives market and align it more closely with global practices. While commodity futures trading is already well established in segments such as energy, bullion, and agricultural products, steel derivatives remain relatively underdeveloped in India despite the country’s large production base.