Supreme Court Breather For Exporters

The rubber industry got a breather recently with Supreme Court of India upholding the Bombay High Court judgement which struck down a DGFT notification issued to ban import of rubber under advance licence scheme (ALS).

Since imports under advance licence were duty free as they were against exports of rubber goods, exporters could now import natural rubber without duty for export production.

In the last financial year about 52,000 tonnes of natural rubber was exported from the country as against the natural rubber requirement of more than 40,000 tonnes by rubber product exporters.

The government had banned imports under ALS in February 1999 through a circular following a steep fall in the price of rubber during 1998-99.

Later government also introduced measures such as fixing minimum statutory price for rubber to help stabilise the prices amounting to protect the domestic rubber growers.

The ban was relaxed later in 2001, but was again tightened last year as over 40,000 tonnes of rubber was imported.

Though the SC ruling has paved a way for rubber product exporters to now import natural rubber against ALS, the government stipulation of allowing imports only through Visakhapatnam and Kolkata ports continued to be a major hurdle for the rubber product exporters.

All India Rubber Industry Association (AIRIA) has already made representation to the union commerce minister in this regard. Anil Sampat, president of AIRIA said that this was a restriction on import of rubber through the port of choice.

It made extremely unviable for rubber units in the western and the northern regions to import rubber for requirements at international prices as the logistics cost was larger than profits from exports.

Moreover, non-tariff barriers in the form of inspection of rubber by Rubber Board took about 6.15 days as the rubber samples had to be moved from Kolkata to Kottayam. This further added to cost.