Trade Winds

On the origins of commodity trading in India

According to Dr William Bernstein (author of the book reviewed above), there are a few key factors behind successful investing. One of them is understanding history. Back to the Future: Roots of Commodity Trade in India is an effort by two authors to trace the early evolution of commodity trade in India. With excerpts from ancient manuscripts of the Rigveda, Ramayana, Mahabharata and other Vedic texts, the book gives the reader a perspective on the early days of merchants and their voyage to the various corners of India.

Jignesh Shah, a serial entrepreneur in the financial sector, best known for setting up India’s most successful commodity exchange, MCX, and Biswajeet Rath, a historian, provide useful and factual insights on the role of the Sultans, the Farmans and the European invaders. The book throws light on the emergence of textiles which became the most valuable commodity trade during the Mughal era. With lucid narration and captivating pictures of ancient artefacts, commodities, and manuscripts of ancient India, the book is rich in detail.

In any trade, the role of intermediaries and hedging is critical. The East India Company used dadni (Persian word meaning ‘advance’) for merchants to procure goods from the market on its behalf. These merchants passed the dadan to actual manufacturers, either directly or through intermediaries like dalals (agents) or paikars (local stockists).

The book travels from barter, the early exchange medium of trade, to the emergence of silver coins and gold. In medieval India, one measure of pepper was equivalent to 5 nalli of paddy, and 3 kalanju of camphor to one kasu of gold. Traditional Indian spices, particularly pepper, have brought in a huge amount of Roman gold in India from the 1st century.

The book narrates the evolution of commodity trade by providing extracts from ancient Indian literature, archaeological evidence and price regulation. Although there are many books which teach you how to trade in commodities, Back to the Future is among the very few books which provide a historical perspective. It is a must read for anyone who wishes to understand the evolution of commodity trade in India.

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