The Hindu Business Line : Imports under advance licence — Rubber goods sector fears policy change

THE rubber goods manufacturing sector, which heaved a sigh of relief after the Supreme Court recently upheld the decision of the Bombay High Court paving the way for natural rubber import under advance licence, is now apprehensive that the Government may hasten to amend the policy to throw a spanner into the industry works.

The apex court had held that the DGFT circular restricting natural rubber imports against advance licence was not within law, and that changing of policy in the guise of laying down procedures was unconstitutional.

While industry is fearing that such an amendment may be pushed through by the Government, under pressure from the powerful growers' lobby, knowledgeable circles aver that the Union Minister for Commerce and Industry, Mr Arun Jaitley, might not be favourably inclined towards such a move as it would go against the WTO norms. Informed industry sources too share this view.

Asked on current developments, Mr M.F. Vohra, Capexil Chairman, and Managing Partner of Zenith Rubber, said the DGFT had already referred the matter of clearance of natural rubber import under advance licence to the Commerce Ministry.

He said orders for import of 20,000 tonnes of natural rubber had already been placed, out of a contracted 30,000 tonnes of NR import for the current year. In 2002-03, imports were a meagre 7,500 tonnes.

Sources familiar with the situation on the growers' front, however, point out that given the current domestic price situation of nearly Rs 50 per kg, growers were not unduly worried about relaxation in duty-free import restrictions. In other words, imports at the moment, when international prices at around Rs 47 per kg were still quite high, might not be such a worrying factor to the plantation sector.

Mr Vohra said the Supreme Court verdict had vindicated the industry position that the plantation sector was being supported by the Government departments at the cost of the rubber processing industry. He flayed the cash subsidy being given to the growers to export rubber, and also the sop of not charging cess on the exported rubber, which was contrary to the provisions of the Rubber Act. Such exports (said to be around 50,000 tonnes last year) had led to a rubber deficit situation of nearly 98,000 tonnes, he pointed out.

According to Mr Anil Sampat, President of All India Rubber Industries Association (AIRIA), the steep increase in natural rubber price domestically was a direct result of such cash subsidy and cess-free benefit to growers. The prices of rubber have jumped from Rs 26 to a band of Rs 44-Rs 52 currently.

The AIRIA, in a recent representation to Mr Jaitley, has demanded immediate removal of port restrictions on natural rubber imports, withdrawal of subsidy on rubber exports, reduction in import duty on NR to nil, setting up of an independent board for rubber with equal representation from industry and planters (as the Rubber Board, according to Mr Sampat has now become the voice of planters only), and withdrawal of inspection of imported rubber as it led to delays and did not serve any purpose.

The association has pointed out that the Rubber Board was formed for improvement of both the plantation sector and the rubber industry, and that its role was not meant to be partisan, supporting one sector over another. It is suggested that in order to physically prevent rubber from bring imported, restrictions on the choice of port have been imposed.

While the consuming industry is in the West, South and North, general imports are permitted only through Kolkata and Visakhapatnam in the East. Mr Sampat said during discussions in August 2002 with industry, in which the Chairman of the Rubber Board had also participated, the Government had assured that these port restrictions would be removed by September 2002.

According to AIRIA, the existence of some 5,000 small and tiny units directly employing over 4 lakh people was now threatened. The Rubber Board inspections, which take 6-15 days, as the rubber samples have to move from Kolkata to Kottayam, have further added to the spiralling cost of rubber, it is pointed out.

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