New Delhi, Jan 1 (IANS): Industry body CII on Monday said that Commodities Transaction Tax (CTT) on agricultural produce should be abolished to protect farmers' income.

The industry body said that after witnessing an exponential growth since its inception till FY 2011-12, the commodities Futures market in the country has seen a contraction due to "various reasons such as suspension in trading of few commodities, enforcement of stock limits in certain commodities from time to time, introduction of CTT, etc."

According to Chandrajit Banerjee, Director General, CII: "The country remains one of the largest producers in the world for most of the agricultural commodities and there is an urgent need to safeguard the interests of the various stakeholders including farmers by providing them adequate hedging facilities through development of commodity derivatives market."

He added: "The move to bring the regulatory control under Securities and Exchange Board of India (SEBI) has paved the way for next level of reforms in Indian commodity markets that aim not only at deepening and widening of the market but also make it safer for every stakeholder including farmers to transact efficiently".

The SEBI has allowed options contracts and has also allowed hedge funds to invest in commodities market to deepen the Indian commodity derivatives market by allowing the entry of financial institutions.

To support the initiative of SEBI, CII further recommended various measures which it feels, if implemented, would go a long way in helping the commodities market grow and become more vibrant and allow them to further benefit the entire commodities value chain and its participants starting from the farmer.

As per CII other recommendations, SEBI should allow the agri-commodity derivative markets to stay open till 8 p.m. on weekdays and Daily Price Limits (DPL) on commodity futures contract to be relaxed.