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Tuesday, Aug 10, 2004

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Port restriction on natural rubber imports scrapped

K.R. Srivats

New Delhi , Aug. 9

THE United Progressive Alliance Government has done away with the mandatory port restriction on import of natural rubber into the country.

Import of natural rubber will now be allowed through all ports for export oriented units and domestic tariff area units. The domestic tyre industry, which is a significant consumer of natural rubber, will benefit from this decision through lower transaction costs on natural rubber imports.

Sources said the captains of the domestic tyre industry had a meeting with the Commerce Minister, Mr Kamal Nath, last week and discussed the problems faced by the industry.

The recent trend of strong natural rubber prices coupled with the steep increase in international oil prices impacted the profit margins of the tyre industry.

The NDA Government in December 2001 introduced the port restriction and stipulated that natural rubber could be imported into the country only through the ports of Kolkata and Vishakapatnam.

Ever since the Centre imposed these restrictions, the domestic tyre makers have been demanding its removal saying that such curbs caused them additional transaction costs.

In August 2003, Ceat Ltd filed a writ petition in the Bombay High Court against the restriction. However, the petition was dismissed by the high court.

In December 2001, the Centre introduced port restrictions on the ground that there were difficulties in collecting data on the quantum of natural rubber imports coming into the country. The absence of appropriate information, it said, delayed policy response to address the concerns of domestic planters of natural rubber.

The domestic tyre makers, however, argued that the reasons given by the Government for imposing such restrictions were not justified in the current environment, especially when latest technological and communication advancements were at the Government's disposal.

While the Government's decision on port restriction came when domestic prices of natural rubber were depressed, tyre makers have been claiming that the current "changed scenario" (strengthened prices of natural rubber at about Rs 59-60 per kg) did not warrant the continuation of the restrictions.

A senior tyre industry official said the domestic tyre industry imported about 23,000 tonnes of natural rubber during April-July 2004.

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