The Hindu Business Line : Spurt in rubber prices may not hit manufacturing sector

Rubber prices have reached yet another milestone as it touched Rs 100 a kg. In response to a question about the unprecedented rise in rubber prices and its impact on the consuming sector, Prof. K.K. Abraham, a spokesman of the producing sector and President of the Pala Rubber Marketing Society, said manufacturing industry would not face any crisis due to the spurt in rubber prices.

He quoted the example of petrol price a decade ago and compared its present value.

"It is usual that there might be hue and cry against such price hikes. But gradually when status quo is maintained the consumers realise that in the absence of a most essential product movement is restricted and life gets paralysed. In the case of tyre, the situation is not different. Since the raw material cost is high, there should be resentment on the part of the manufacturers. But such feelings form only part of a temporary phase and the market will adjust to it," he said.

Mr George Valey, President, All India Rubber Dealers Federation, told Business Line that the rubber prices beyond a particular level would adversely affect the tyre manufacturers.

Regarding small scale industries also the prices are ruling above their purchasing power. If the present trend continues for long it would affect their existence.

On the other hand, the domestic rubber growers should get the prices prevailing in the overseas market, argued Mr Valey.

The growers here never expected that the prices would touch Rs 100 in such a short period.

All other crops are under the threat of price falls. The rubber growers appear to be happy. If the prices go beyond a certain level it would harm them in the coming years.

The investment of the rubber dealers has doubled. The total turnover has been reduced to 50 per cent. Possibilities are evident to incur more loss. Payment of interest is also more.

There has been corresponding increase in insurance, bank charges and so on.

It has become difficult to ensure prompt delivery to exporters and purchase agents.