India’s agriculture-focused commodity exchange NCDEX has decided to acquire about a 20% stake in Sri Lanka’s first commodity and financial derivatives exchange. The proposed investment will move ahead once regulators in both countries approve. If completed, this will be one of the rare instances of an Indian exchange taking equity in an overseas trading platform.
NCDEX’s Investment Plan
The new Sri Lankan exchange, CSEDEX, is being built by the Colombo Stock Exchange. NCDEX will invest 70 million Sri Lankan rupees to secure a minority stake and a seat on the board. The plan follows an MoU signed in January 2025 between NCDEX and CSE.
The arrangement follows a build-operate-transfer model. NCDEX will support CSEDEX in areas such as technology, product development, rule-setting for derivatives markets, training, and designing a regulatory framework aligned with global standards.
Approvals Required in India and Sri Lanka
To move ahead, NCDEX will require clearance from SEBI, the Ministry of External Affairs, and the Department of Economic Affairs. Sri Lanka will need approvals from its Securities and Exchange Commission, along with government approval, since the deal is treated as foreign direct investment.
Sri Lanka issued a request for proposals for its new exchange, and NCDEX has responded with its plan to partner through equity and technical support.
Strategic Context and Regional Positioning
NCDEX CEO Arun Raste said the partnership fits the exchange’s larger plan to expand into equities and broaden its regional presence. According to Raste, NCDEX aims to create platforms that meet global standards while supporting development in neighbouring markets.
CSE Chairman Dilshan Wirasekara said the partnership is a major step in expanding the country’s capital market offerings. Sri Lanka currently has no active commodity or derivatives exchange. CSEDEX intends to fill that gap by enabling trading in both commodity and financial derivatives.
India’s Regional Competition
The move comes at a time when India is looking to build a stronger presence in South Asia’s exchange ecosystem. Earlier attempts by Indian exchanges to enter regional markets faced competition from Chinese exchanges, including Bangladesh’s Dhaka Stock Exchange stake sale in 2018, where a Chinese consortium outbid NSE.
Chinese entities have also been active in Pakistan, Nepal, and Myanmar. NCDEX’s entry into Sri Lanka is being viewed as a chance for India to strengthen its role in the region.
Commodity Landscape in Sri Lanka
Sri Lanka is a major producer and exporter of tea, rubber, coconut, and spices. These commodities are central to its export economy. A domestic derivatives exchange will offer better price discovery and risk management tools for farmers, traders, and industry players who currently lack such mechanisms.
NCDEX’s Domestic Situation
NCDEX is expanding overseas at a time when its domestic volumes remain subdued due to the suspension of derivatives trading in several key agri commodities. These contracts once made up nearly 70% of its total volumes.
Revenue from operations fell to Rs. 122 crore in FY25 from Rs. 136 crore in FY24, a decline of 10%. The exchange reported a net profit of about Rs. 234 crore, mainly due to one-time gains from selling stakes in NERL and PXIL. Despite low operational revenue, NCDEX remains financially stable with Rs. 700 crore in cash and Rs. 308 crore in investments.
Expansion into Equities
NCDEX has obtained in-principle approval from SEBI to launch equity and equity derivatives. The exchange plans to invest Rs. 400–600 crore into the new segment. It has already raised about Rs. 770 crore from 61 investors to support this expansion.
Next Steps
NCDEX is now waiting for regulatory approvals in India and Sri Lanka. Once cleared, the exchange will begin setting up CSEDEX’s market systems, product framework, and operational backbone. The collaboration marks a significant moment in India–Sri Lanka financial cooperation and could become a model for future exchange partnerships in the region.
.jpg.jpeg)
