In a significant effort to protect India’s agriculture sector from climate unpredictability, National Commodity & Derivatives Exchange (NCDEX) and the India Meteorological Department (IMD) have signed a Memorandum of Understanding (MoU) to develop the country’s first weather derivatives. Signed on June 26, 2025, the agreement marks a major step toward creating market-based tools to manage risks from irregular rainfall, extreme heat, and unpredictable weather events.
The collaboration aims to design rainfall-based derivative products, leveraging IMD’s vast archive of historical data and real-time weather updates. These datasets, scientifically verified and quality-graded, will form the backbone of the new financial instruments, which are expected to offer seasonal and region-specific contracts. The upcoming derivatives will enable better risk management not just for farmers, but also for sectors such as transportation, tourism, and logistics that are frequently impacted by weather disruptions.
NCDEX Managing Director and CEO Arun Raste emphasized the importance of this innovation, stating that weather derivatives have been a long-standing requirement in India’s rural economy. He noted that climate change continues to impact farmers' productivity and income, and such market-based tools can offer a robust shield against weather uncertainties. Raste expressed pride in NCDEX’s pioneering role in launching this new financial avenue, which he believes will empower not just farmers and agri-traders but also other climate-sensitive sectors.
IMD Director General Dr M Mohapatra said the department has always played a key role in supporting agriculture and disaster resilience. “Through this collaboration with NCDEX, we are now extending our scientific capabilities into the financial domain, allowing weather data to become a powerful instrument of economic stability and market innovation,” he said.
The MoU will also pave the way for joint research and capacity-building programs. Training sessions and outreach initiatives will be rolled out for farmer producer organizations (FPOs), agri-traders, policy think tanks, and analysts to increase awareness and adoption of weather-based risk management tools.
