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M.R. Subramani

"The total subsidy for rubber exports works out to over 23 per cent. This includes Rs 3.50 a kg cash subsidy extended by the Centre, waiver of rubber cess of Rs 1.50 per kg by the Rubber Board and exemption of purchase tax of 12.65 per cent."

Chennai , Sept. 8

CONCERNED over rising prices, the tyre manufacturers have urged the Union Minister for Law and Commerce, Mr Arun Jaitley, to reconsider the Government's decision to provide subsidy for exports of natural rubber (NR).

"... it is our submission that the restrictions on import of NR and export of NR through subsidy route— steps taken to achieve certain end results— need reconsideration, especially as the intended objectives of the Government have been achieved," the Automotive Tyre Manufacturers' Association (ATMA) Chairman, Mr Raghupati Singhania, said in a letter to Mr Jaitley.

Stating that rubber prices have been rising steeply from Rs 37 a kg for RSS-4 in August 2002 to around Rs 50 a kg currently, Mr Singhania said some of the measures taken by the Government to help buoy NR prices have "resulted in undue hardship, avoidable inconvenience and additional financial burden on the consuming industry, including the tyre sector".

He said three points bear relevance. One, exports through subsidy route should be confined only during the initial entry period.

Two, when domestic price of a commodity rises steeply, export through subsidy needs reconsideration and three, encouraging "deemed export" that is the preferred choice for producing and consuming sectors.

On Friday, RSS-4 was quoted at Rs 4800 a quintal, up Rs 250 over the previous close, on purchases by the covering groups.

In a detailed note to Mr Jaitley, ATMA said the total subsidy for rubber exports worked out to over 23 per cent.

This includes Rs 3.50 a kg cash subsidy extended by the Centre, waiver of rubber cess of Rs 1.50 per kg by the Rubber Board and exemption of purchase tax of 12.65 per cent by State Governments, especially Kerala that accounts for over 95 cent of rubber production.

The tyre makers' apex body pointed out that as against the benchmark price of Rs 34.05 a kg and statutory minimum price of Rs 32.09 a kg fixed by the Union Government, the current market price was far higher.

Even if the cash subsidy and waiver of rubber cess were discontinued, Kerala would continue with waiver of purchase tax.

"According to our reckoning, this is a liberal subsidy," ATMA said and added that even Kerala should be urged to discontinue to the waiver.

Pointing out to restrictions on import of rubber, the tyre makers said most of the imports were for export production.

Currently, rubber imports are permitted only through Visakhapatnam and Kolkata ports.

Besides, the Rubber Board will have to certify that imports pertain to BIS standards before being cleared from the ports.

Mooting "deemed export" scheme for rubber, ATMA said instead of exporting, the produce could be given to domestic tyre sector for export purpose.

"The Government could extend exemption of purchase tax and export cess for such sales," it said.

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