The Hindu Business Line : AIRIA, Capexil to chalk out rubber subsidy scheme

THE All-India Rubber Industries Association (AIRIA) and Capexil have decided to jointly work out a scheme for reimbursement of price differential between international price and domestic price of natural rubber (a kind of subsidy scheme against export of natural rubber-based products) for submission to the Rubber Board.

At an interface here on Saturday between representatives of trade and industry, and Mr S.M.Desalphine, Chairman, Rubber Board, it was agreed that the board would closely examine such a scheme before submitting it to the Government for consideration.

After listening to the various issues raised by the exporters and the AIRIA representatives, led by Mr Anil Sampat, president, Mr Desalphine suggested that most problems of the industry could be addressed properly through such periodic interactive sessions.

Such a subsidy scheme was formulated earlier by the Government to offset the gap between indigenous price of raw rubber and international price of equivalent grades of rubber by grant of subsidy for certain specified rubber manufactured products.

The board used to announce every month the amount of subsidy payable to the exporters under the scheme, which was valid up to March 31, 1995.

Subsidy was worked out on the basis of actual rubber content in the finished products, after taking into consideration the maximum prescribed rubber content. While applying, the exporters were required to declare the actual indigenous natural rubber (NR) content in the products exported, and it had to be certified by a chartered accountant. The facility was available to both manufacturer-exporters and merchant exporters, and for calculating the difference between indigenous and international price, weighted average pool price was taken as the cost of NR in the domestic market, and the landed price which included f.o.b. price of NR at Kuala Lumpur plus freight and insurance.

According to Mr M.F. Vohra, Chairman of Capexil, since the gap between indigenous and international price of NR of different grades still existed, together with a ban on import of the same under advance licence, it was urgently necessary to re-introduce the natural rubber subsidy scheme for making Indian export of rubber manufactured products more competitve in the global markets.

Mr Desalphine, while agreeing to examine the proposal, said it must first be established that such schemes did not clash with the existing DEPB or other such export facilitation schemes.

Mr Vohra pointed out that in view of the ban on import of NR under advance licence, the board might formulate a new scheme for supply of different grades of NR to exporters against surrender of advance licences.

Such supplies, according to the Capexil Chairman, could be made at international price and the exporters may get their advance licences with NR as one of the items of import converted into ARO (advance release order) for procurement. A strong plea was made to the board to re-consider the policy of not allowing regular import of NR, except through the two ports of Kolkata and Visakhapatnam. Mr Vohra said this would add to the already high transaction costs.

Talking to Business Line after the meeting, he said some 140 scientists associated with the board were now conducting research on many such specialised grades of NR.

Mr Vohra said rubber manufacturers need dry NR as well as NR latex of non-standard grades for making specialised items like catheter, condoms etc.

He urged the board to come up with some viable alternatives to ensure steady supply of non-standard grades at short notice, so that production was not hampered.

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