Don't reduce import duty on rubber: Industry Assn

Rubber growers have asked the Commerce Ministry not to reduce the import duty on natural rubber, as demanded by tyre makers, saying that it would hurt farmers in the long run.

"There is no rationale in the demand of the consuming industry to reduce the import duty of natural rubber and ban futures trading in natural rubber," the Indian Rubber Growers Association said in a letter to Commerce Minister Anand Sharma.

The association has argued that the demand of the tyre industry is "unreasonable" and "without any basis", as natural rubber production in the country is adequate to meet domestic demand.

The Indian Cycle & Rickshaw Tyre Manufacturers Association, Automotive Tyre Manufacturers' Association (ATMA) and All-India Rubber Industries Association have been demanding a reduction of import duty on natural rubber from 20 per cent at present to 7.5 per cent, due to high domestic prices.

They have also moved the Delhi High Court in this regard. Recently, the court directed the Centre to form a committee to look into their demands.

The industry is also seeking ban on futures trading in rubber. However, the growers' body feels that futures trading is a fair and transparent mechanism, which should not be discontinued.

"By the introduction of futures market, an efficient, transparent, parallel mechanism is in place to the advantage of all stakeholders. Market price and futures price invariably converge on the delivery date. Natural rubber price in India is in conformity with the international price," the association said.

The tyre makers' demand to reduce the import duty on natural rubber comes in the wake of high prices of the commodity in the domestic market, which have been ruling in the range of Rs 160-170 a kg.

While ATMA has alleged that prices have shot up sharply on account of rubber growers hoarding the commodity, the growers' association counters the charge saying that prices are moving in tandem with global rates, which are abnormally high on account of the political unrest in Thailand.

India, which is the fourth largest rubber-producing country in the world, has an output of 9 lakh tonnes annually. About 10 lakh farmers are involved in growing rubber and about 60 lakh people are indirectly associated with this agri-business.