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Mohan Padmanabhan

KOLKATA, Dec. 16

THE rubber goods manufacturing sector — getting ready for crunch time over the huge spurt in the prices of standard grades of natural rubber such as RSS4 (whose price has skyrocketed to Rs 43 from Rs 32 in a span of four months) — has urged the Government to remove port restrictions on rubber import and release additional stocks that may be available as per Rubber Board statistics.

Talking to Business Line, Mr M.F. Vohra, Chairman of Capexil and Director, Zenith Rubber, said the Government should also abolish the cess on natural rubber (NR) and reduce the purchase tax (in the rubber-producing States) from the existing 12.6 per cent to 4 per cent to give some relief to the rubber consuming industry.

Pointing out that the planters could survive only if the consuming industry was healthy, he said the current price spurt in the prices of natural rubber had put an additional burden of nearly Rs 800 crore on rubber products manufacturers. "While they talk of holding the price line on the one hand, it seems that they also fuel the rise in prices of natural rubber," he said.

The Rubber Board, he said, had been crying hoarse over carry-over stocks of nearly 2.5 lakh tonnes. "If this is the level of stocks available in the country, can they explain this sudden spurt in NR prices?" On a production level of 6.5 lakh tonnes annually, the average consumption is said to be around 6.8 lakh tonnes. He said these days it was difficult to get even a small quantity of 10-20 tonnes of natural rubber as planters had turned speculative, and "are not offering their rubber in the market, thereby fuelling a rise in prices".

Lashing out at the various restrictions imposed on industry like ban on import of NR through Advance Licence for export production, and restricting general import to only two ports, he said Indian natural rubber was being exported far below the international prices to claim the Rs 7 per kg subsidy.

Pointing out that the new proposals put forward by Capexil to the Rubber Board for revival of the Rubber Subsidy Scheme for product exports was now gathering dust, Mr Vohra said while industry still had to bear the burden, the natural rubber exported by the Government-designated authority was not being subjected to the rubber cess, as provided for under the Rubber Act and Rules. The Government, he said, was losing at the rate of Rs 1.50 per kg by way of cess on the rubber exported, which translates into about Rs 3.4 crore on the targeted exports of 20,000 tonnes. And for the planters, since there is no cess and if the Rs 7 subsidy is added, it works out to a handsome Rs 17.4 crore, he said.

Mr Vohra said the MSP for RSS grade has been fixed at Rs 32.09 per kg by the Supreme Court, and in the absence of any upper ceiling, the planters should feel elated. But they should realise that this may well sound the death knell for many small-scale rubber products unit which, when totally out-priced, would be forced to down shutters.

Adding a note of caution, Mr Vohra said the international prices of rubber had declined from $880 per tonne to $780 now, which was far below the Indian prices. He said the authorities should wake up to the fact that "we are only opening the floodgates for cheap imported products to find their way into Indian markets".

On the assurance by the Government to planters that it would appeal before the Supreme Court against the Bombay High Court order, which struck down the DGFT circulars (restricting duty-free import of rubber under advance licence) as illegal and null and void, Mr Vohra said this may well raise the anxiety levels of the industry further.

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