The Hindu Business Line : Tyre companies seek suspension of rubber exports

Tyre manufacturers have urged the Union Government to temporarily ban exports of natural rubber (NR) from India to tide over the acute shortage of the commodity in the domestic market.

In a letter to the Union Commerce Minister, Mr Kamal Nath, the Automotive Tyre Manufacturers' Association (ATMA), which represents a majority of the manufacturers, said the price of NR had escalated by 45 per cent in the past one year and domestic production of rubber was insufficient to meet the demand.

"In the altered scenario of NR production in the country falling short of domestic consumption requirement, steep escalation in the price during the last two years, and import to meet the deficit being an extremely costly option, we are seeking temporary ban on exports ," ATMA said in the letter.

India exported around 70,000 tonnes of NR during 2005-06. In the current financial year, the Rubber Board estimates exports to be lower at 50,000 tonnes.

"When domestic production of NR is insufficient to meet domestic demand, export at this juncture would further tighten the position, apart from giving further boost to the already high price of NR in the domestic market," the ATMA Chairman, Mr Paras K. Chowdhary, said in the letter.

Difficult option

ATMA said bridging the gap between production and demand of NR through imports was a difficult option since international rubber prices were higher than the domestic price.

Inspite of this, tyre industry was planning to import 20,000 tonnes of natural rubber in the next few months. "This is because of the apprehension of stock out position in NR envisaged in the next few months, with attendant problems of limited stock being chased by buyers and thereby further escalating market price and the eventuality of tyre production being affected for want of NR."

ATMA pointed out that tyre companies would have to shell out an additional Rs 1,200 crore and non-tyre sector Rs 1,000 crore a year because of the 45 per cent jump in NR prices. The domestic consumption of NR is estimated to be around eight lakh tonnes this year.

An ATMA official said even though Rubber Board's statistics showed that NR production in 2005-06 was a shade higher than the consumption, this occurred only because introduction of the four per cent VAT in 2005-06 put paid to smuggling of rubber from Kerala and this rubber got accounted.

NR prices have risen to record levels world over as demand outstripped supplies, higher crude prices pushed up synthetic rubber and various catastrophes affected production. In the domestic market, prices are now ruling at over Rs 90 a kg.

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