The Hindu Business Line : Scrapping of subsidy on natural rubber export urged

DOMESTIC tyre manufacturers have urged the Central Government to immediately discontinue the subsidy on natural rubber exports. The Automotive Tyre Manufacturers' Association (ATMA) has held that the move to continue with such a subsidy is one of the main reasons for the ``steep increase'' in natural rubber prices in the last one year.

In a statement issued here today, the Chairman of ATMA, Mr Raghupati Singhania, said the subsidy was being continued even when the international price of natural rubber was ruling above the domestic price. ``Where then is the justification for continuing with the subsidy?'' the statement quoted Mr Singhania .

The statement highlighted that the subsidy had resulted in export of over 70,000 tonnes of natural rubber in 2003-04, against an export of 13,300 tonnes in 2000-01, thereby, bringing the stock level of natural rubber in the country to less than sixty days of consumption of the rubber user's sector.

With international prices of natural rubber being higher than the Indian price, Mr Singhania highlighted that the subsidy had enabled tyre manufacturers in other countries, sourcing natural rubber from India, to compete with Indian tyre exports. This, he said, was incongruous to the thrust of the Exim Policy.

``This policy is giving undue advantage to international tyre manufacturers, whereby, they are getting access to cheaper raw materials from India for their production, whereas Indian tyre industry and rubber goods sector are forced to source natural rubber prices at exorbitant prices,'' the statement said.

ATMA has mooted a six-point action plan for the Government to provide relief from the crisis faced by the tyre industry. As part of the plan, the association has suggested that the domestic tyre manufacturers be allowed to import a pre-determined quantity of natural rubber at a lower rate of customs duty than the applicable rate of 20 per cent.

Further, ATMA has suggested that the Kerala Government be persuaded to reduce the purchase tax of 12.65 per cent . The association said the spurt in natural rubber prices has helped the State Government to garner substantially higher revenues.

ATMA has also sought reduction of the rubber cess of Rs 1.50 per kilogram on natural rubber charged by the Government to Re 1 per kg. Other suggestions include the removal of port restrictions on natural rubber imports.

At present, natural rubber can be imported only through the ports of Kolkata and Visakapatnam. The domestic tyre manufacturers said this restriction added to the cost of import for the natural rubber user segment.

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