- NSE will launch India’s first natural gas futures contract linked to a domestic benchmark on July 27
- The contract will be based on the IGX Gujarat (Dahej) hub price, not international reference prices
- NATGASIND contracts will be cash settled, eliminating the need for physical delivery of natural gas
The National Stock Exchange (NSE) is set to launch India's first exchange-traded natural gas futures contract linked to a domestic benchmark on July 27, marking a significant step in the evolution of the country's commodity derivatives market.
The new product is expected to provide transparent, India-based price discovery while helping gas consumers, producers and traders manage price volatility.
The launch follows approval from the Securities and Exchange Board of India (SEBI), allowing NSE to introduce the contracts in its commodity derivatives segment.
India's First Domestic Benchmark-Based Energy Derivative
Unlike existing energy derivatives that track international reference prices, the new contract will be based on the Indian Gas Exchange's (IGX) Gujarat (Dahej) hub price, making it the country's first energy derivative referenced to a domestic benchmark.
In a post on X, NSE described the launch as "India's first exchange to introduce Energy Derivatives referenced to a domestic benchmark" and called it "a new milestone in India's commodity derivatives market."
The contract will trade under the symbol NATGASIND and will be cash settled, eliminating the need for physical delivery of natural gas.
Designed To Improve Price Discovery
The introduction of the futures contract comes as India's natural gas market becomes increasingly market-driven. Industry participants have long sought a domestic pricing benchmark that better reflects local supply-demand dynamics instead of relying primarily on global gas indices.
According to NSE, the final settlement price will be calculated using the monthly weighted average price of actual deliveries at the IGX Gujarat (Dahej) hub during the contract month. Transactions conducted at ceiling prices, spot LNG trades and long-duration contracts will be excluded from the settlement calculation.
The exchange said the framework is intended to ensure transparent and representative pricing for the domestic market.
Also Read: Govt Withdraws Emergency Gas Supply Curbs As LNG Shipments Resume Via Strait of Hormuz
Contract Specifications
Each futures contract will have a trading unit of 250 mmBtu and will be available for trading from Monday to Friday.
NSE Clearing will handle clearing, settlement and risk management. Daily mark-to-market settlements will be carried out based on closing prices, while initial margins, extreme loss margins and pre-expiry margins will apply under the exchange's prescribed risk management framework.
Monthly contracts will be introduced according to NSE's launch calendar.
Boost For India's Gas Market
The launch comes as India continues to expand the role of natural gas in its energy mix. The government has set a target of increasing natural gas' share in the country's primary energy basket from around 6% to 15% over the coming years through investments in city gas distribution networks, LNG infrastructure and pipeline connectivity.
Market participants believe a domestic benchmark-based futures contract could improve hedging opportunities for gas producers, industrial consumers, city gas distributors and power companies while supporting the development of a more efficient and transparent gas trading ecosystem.
With the introduction of NATGASIND, NSE is entering the domestically benchmarked energy derivatives segment for the first time, offering participants a new tool to manage price risk based on Indian market fundamentals rather than overseas benchmarks.
Also Read: ONGC Is Now A 'Gas-And-Oil' Company As Output Shift Accelerates Toward Natural Gas
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