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Planters seek hike in import duty on rubber to 30%

Cheap imports in recent years have resulted in a massive fall in the prices of rubber in the domestic market

Mahesh Kulkarni  |  Bengaluru 

The United Planters’ Association of Southern India (UPASI), a body of planters, has urged the government to increase the import duty on natural rubber to 30 per cent from the existing levels of 20 per cent to protect domestic growers who are suffering huge losses due to a price crash. “Unless such an immediate measure is taken, it would affect the livelihoods of 1.2 million growers who are involved in growing this important industrial raw material and there is a danger of many growers diversifying into other crops,” Vijayan Rajes, President, UPASI, said in his pre-budget memorandum. Read our full coverage on Union Budget He refuted claims of the consuming segment that the import of natural rubber has not affected the prospects of local farmers.

According to import data, it is evident that the imports have surged in the last few years. During the current year, this trend continued unabated and the quantum imported during April-December 2014 rose to 351,000 tonnes, compared to 288,000 tonnes during the same period, showing an increase of 22 per cent year-on-year. The consumption, however, increased just 4.4 per cent to 764,000 tonnes from 731,000 tonnes a year ago. India until recently was leading the pecking order in terms of productivity in the world natural rubber map, but has been pushed down to the fifth position as producers stopped tapping due to the unremunerative prices as a result of the large-scale imports of natural rubber. Non tapping by growers is one of the main reasons for a drop in crop and this drop is being used as a reason to bring in more imports.

Currently, prices are ruling at Rs 126 per kg from Rs 241 per kg in April 2011, a decline of 48 per cent. “There were statements by the consuming sector suggesting that imports have not proportionately increased compared to the decline in production. This statement is nothing but a statistical artefact. It’s as if one takes production and imports to broadly represent supply in the domestic market, and consumption and exports to represent demand, it is evident that imports during the current fiscal is in excess of 116,000 tonnes compared to the domestic requirement,” Rajes said. The government should allow imports only to the extent of the demand-supply gap, he said and added that large scale imports, that too during the peak production periods, are resorted to with a sinister motive of depressing domestic prices. It is therefore necessary that the government should intervene to safeguard the interests of the large number of small and marginal growers depending on this important plantation sector.

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First Published: Fri, February 27 2015. 20:50 IST