The Hindu Business Line : Rubber trade upset over cut in export subsidy

THE Government's decision to cut the subsidy given for rubber exports by 50 per cent is an inadequate measure to promote exports, according to traders and exporters.

The new rates are not enough to cover the additional expenses incurred for the exports and there is still confusion on whether the Government will give subsidy for the additional 26,000 tonnes of rubber exported last fiscal, over and above the targeted 50,000 tonnes, they say.

"The Government should have maintained last year's rates to give boost to rubber exports," said Mr Baiju Radhakrishnan, Managing Director of Kerala State Agro Co-operative Ltd (Agreenco).

He said rubber exporters still required support from the Government to compete in the international markets, where Indian rubber is a relatively new entrant.

"Countries such as Malaysia and Thailand give enough support even now. This is the only way you can bring your trade up to the international level."

Mr Radhakrishnan said Agreenco had orders to export 5,000 tonnes of rubber since the beginning of this fiscal. It exported 4,600 tonnes during October-March 2003-04.

The Government on Thursday announced a cut in rubber export subsidy by 50 per cent.

As per the new rates, RSS-4 grade will get a subsidy of Rs 1.75 per kg (Rs 3.50), while latex will get Rs 2 and block rubber Rs 2.50.

When the subsidy was announced, the goal was to export one lakh tonnes during the 10th Plan period. However, exports have topped 1.30 lakh tonnes in just two years.

In the current fiscal, the subsidy will be applicable for only 50,000 tonnes.

Mr Radhakrishnan said it was unclear whether the quantity included last year's additional stocks for which the incentive was yet to be released.

According to Mr N. Radhakrishnan, President of the Cochin Rubber Merchants Association, the Government should have retained last year's rates in view of the rising stock position in the market.

Though there was severe shortage of the stock in the beginning of the current fiscal, it is bound to increase to healthy levels in the coming months since tapping is expected to be done without any interruption in the coming months.

"Now we estimate that there is about 70,000 tonnes of stock; this would cross 1.30 lakh tonnes by January. In view of this trend, full subsidy should have been provided for the year," Mr Baiju Radhakrishnan said

The current rate of Rs 1.75 per kg will not help exporters meet the additional expenses incurred for freight and packaging, he added.

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