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Kochi, Oct. 14

THE Centre should restrict imports of technically-specified rubber (TSR) by industries consuming natural rubber to help the domestic TSR sector, the Cochin Rubber Merchants Association has said.

In a letter to the Ministry of Finance, the association said although the consuming industries use sheet rubber and TSR (also known as block rubber) in the ratio of 80:20, they import these raw materials in the reverse ratio of 20:80.

"The policy of the Government is to allow import of natural rubber under an advance licence scheme against natural rubber actually used in the rubber products exported by the consuming industry... Since both sheet rubber and TSR are termed as natural rubber, the consuming industry imports more TSR than they actually consume... ," the association said in the letter.

Stating that such imports were the "root cause" of the problems faced by block rubber processors, the association suggested that the consuming industries be asked to import sheet rubber and TSR at the ratio in which such rubber is used by the industry.

Block rubber processors, mostly small-scale units with daily production of five to 25 tonnes, are not doing well as their installed capacities are under-utilised. Against an installed capacity of 1.41 lakh tonnes, they were able to produce only 84,275 tonnes during 2004-05.

"Though TSR consumption increased from 87,305 tonnes in 2003-04 to 1,14,290 tonnes in 2004-05, instead of buying from indigenous sources, the consuming industries increased the quantity of imports from 12,763 tonnes to 50,270 tonnes during the period," the letter said.

However, tyre manufacturers said they imported more block rubber because of the inconsistent quality standards of local TSR. Use of scrap rubber in the country to produce TSR is cited as a major reason for the fluctuation in quality.

The association said withdrawal of export incentives too affected the prospects of block rubber units. In 2002-03 and 2003-04, the Government gave a subsidy of Rs 5 per kg for block rubber exported. In 2004-05, this subsidy was halved, and in the current fiscal it was altogether withdrawn.

(This article was published in the Business Line print edition dated October 15, 2005)
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