Rubbermark concerned over bid to stop subsidy for rubber export

By James Paul | 30 Oct 2003

Kochi: The Kerala State Cooperative Rubber Marketing Federation (Rubbermark) has voiced concern at the Automotive Tyre Manufacturers' Association (ATMA) request to stop subsidy for rubber export, remove port restrictions for import of rubber and to stop the quality inspection of the imported rubber by the Rubber Board.

Prof K K Abraham, president of the federation, which is the apex body of 38 primary rubber marketing cooperatives in the state, says the rubber growers feel it is a deliberate attempt by the tyre manufacturers to bring down the price of rubber below the Rs 30-per kg level that existed a few months ago. Now it is hovering at around Rs 55.

The demand-supply position of rubber in the country is so delicately balanced that an import of 30,000 to 50,000 tonnes can cause a crash in the price unless it is offset by an export of an equal quantity. According to Abraham, the incentive given to promote export of tyres work out to be more than 23 per cent as calculated by ATMA.

Enjoying a waiver of 16-per cent excise duty, an average of 10 per cent sales tax and liberal concessions in income tax for their exports, ATMA has no reason to complain about the loss of revenue caused by the export of rubber, he says.

In addition to the above incentives for export of finished goods, when the manufacturers import rubber against the advanced licence, the import duty of 25 per cent is waived and the states lose 12-per cent sales tax.

The federation appealed to the government for increasing the incentives for rubber export by 50 per cent. This is because about a million farmers depend on rubber for subsistence and the tyre sector has been successful in the past in manipulating the domestic rubber price to their advantage as they are more organised and wield greater influence, Abraham adds.

The domestic price of rubber will crash unless the import of rubber under the advance licence is balanced by exports. The tyre companies continue to import rubber even when the domestic price is marginally lower than the international price.

The federation requested that inspection of imported rubber by the Rubber Board should continue to prevent the import of substandard rubber into the country.