The Hindu Business Line : Upasi plea to continue rubber export sops

UPASI has suggested that the export incentive scheme for natural rubber (NR) should continue during the 10th Plan period for maintaining demand-supply balance in the country and for ensuring international price parity.

Export of 55,000 tonnes of NR in 2002-03 could not have been possible without the incentive scheme as the world market is unfamiliar with the Indian product, Mr J.K Thomas, Chairman, Upasi Rubber Committee, said in a press release.

He said that exports in 2002-03 had helped in depleting the huge stock of rubber that had piled up in the country, which resulted in a better price to the growers.

During April-November 2003, rubber exports were placed at 39,045 tonnes compared to 33,490 tonnes reported in the corresponding period last year. During this period, though exports had registered nearly 16.9 per cent growth, domestic prices were lower than the international prices, he pointed out.

Though restriction on exports of rubber was removed in 1992, India could not make any headway in the export front until last year. Till then, invariably all rubber produced in the country was consumed internally by domestic consuming segments comprising of tyre and non-tyre sectors. There was also no sustained effort to increase NR exports, which contributed to the unfamiliarity of Indian NR in the international market.

However, by exporting a small volume of NR in 2002-03 India had really made a dent in the world market and importantly the significant aspect in this regard is the recognition India has gained as supplier of good quality rubber. Obviously, the challenge now is to sustain this trend of high exports for which the export incentive scheme should continue for establishing our markets and for maintaining the much-needed international price parity, he said.

The consuming segment, especially the tyre industry had taken a stand that the incentive scheme, which is in place for NR exports, should be scrapped. The argument put forth for scrapping the export incentive scheme is that incentive extended to NR exports gives an unfair advantage to the tyre exporters in other countries vis-à-vis the Indian counter parts.

Indian exports of 55,000 tonnes last fiscal accounted for only around 1 per cent of the total world NR exports. Further, looking at the pattern of exports it may be noted that NR exports was spread across more than 30 countries.

Juxtaposing these observations, it is only fair to say that export of NR from India accounting for only 1 per cent of world exports and the spread of exports across more than 30 countries would not affect in any way the competitiveness of domestic tyre manufactures vis-à-vis its global counterparts.

In spite of the fact that export of rubber this year being the highest ever, the domestic price continues to be lower than international prices, he said.

Importantly, he said, the export incentive scheme available for NR exports is WTO compatible as these incentives are provided to the exporters towards meeting their cost for packaging, handling and transport, both domestic and international.

Moreover, as per WTO, any country can resort to such an incentive scheme until the export share of the commodity reaches 3.25 per cent of world export. In this context, it is only appropriate that the incentive scheme for exports of NR should continue until we reach such a situation and also to ensure international price parity, he claimed.

According to him the value of the rubber produced is estimated at around Rs 2,459 crore.

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