Rubber Board backs 100% FDI proposal in rubber plantation

DIPP discussing proposal for 100% FDI in rubber and coffee plantation

The Rubber Board, under the Commerce Ministry, has backed a proposal to permit 100% foreign direct investment (FDI) into the plantation sector.

"The Rubber Board is supportive of the proposal. FDI in the sector would help in increasing natural rubber production to meet the growing demand," an official told PTI.

The Department of Commerce as well as the Department of Industrial Policy and Promotion (DIPP) are discussing the latter's proposal to permit 100% FDI in rubber and coffee plantation.

A Jayathilak, Chairman (Additional Charge) Rubber Board said that foreign investment is important to make the country self-sufficient in natural rubber.

The DIPP has proposed 100% foreign investment in these two areas through government approval route with portfolio investment up to 49% under automatic route.

Currently, 100% FDI is permitted only in the tea sector.

Coffee Board is expected to soon communicate its views on the proposal, the official said.

India's natural rubber import increased to 4,42,130 tonne in 2014-15, the highest so far, from 3,60,263 tonne in 2013-14 and 2,62,753 tonne in 2012-13.

The production of natural rubber declined to 12-year low at 6,45,000 tonne in 2014-15 as against 7,74,000 tonne in 2013-14, down 12%. In 2014-15, the consumption was 10,20,910 tonne with a deficit of 3,75,910 tonne.

As per the projections, production and consumption of natural rubber in 2025-26 will increase to 1.36 million tonne and 1.74 million tonne, respectively.

"The projected deficit cannot be filled with existing and expected domestic investment in the sector. It is reported that there are large tracts of barren lands available in North East and other states which are agro-climatically suitable for rubber cultivation," the official added.

To boost domestic production of the crop, the government is in the process of formulating a national rubber policy. Total rubber consumption by various industries, including tyre manufacturers, stood at 10,18,000 tonne in 2014-15, 3.7% higher than the previous year.

Allowing foreign players in these two plantation sectors is part of the several steps from the commerce and industry ministry to boost foreign investments.

In 2014-15, FDI into the country rose 27% to $30.93 billion. To pull in foreign investments, the government has raised the FDI cap in the insurance sector and defence. It has relaxed policy in railways, construction and medical devices sectors.