India: Govt delay in hiking import duty on rubber irks farmers

KOCHI, JUNE 19:

More than 100 days after the Union Commerce Ministry’s recommendation, the Finance Ministry is yet to issue the notification raising the import duty on natural rubber, drawing flaks from farmers’ organisations.

The proposed duty hike, aimed to lift the domestic prices and thus protect the interests of farmers, was recommended by the Union Commerce Ministry just ahead of the Union Budget. Commerce Minister Anand Sharma had, at a top-level meeting of officials and UDF MPs from Kerala on February 26, decided to raise the import duty.

The meeting decided to raise the import duty on natural rubber to reach a cap of Rs 34 a kg from the current Rs 20 and communicated the decision to the Finance Ministry. The duty hike was expected to discourage tyre-makers and other rubber-goods manufacturers from importing as the international prices would not be attractive compared with the domestic prices.

Rubber Board sources told Business Line that the Central Government might have soft-pedalled on raising the duty because of the fact that currently the domestic prices are higher than international prices, by Rs 10-15. (While the current domestic rubber price is Rs 176/kg, for RSS-4 quality, the international price is Rs 162.)

Also, the global economy was not doing well, leading to slackening of demand and hence global price. Moreover, the value of the rupee had slipped against the dollar. Again, because of the monsoon rains in Kerala, there was domestic supply shortage, particularly of block rubber. However, farmers in Kerala who produce more than four-fifth of India’s natural rubber supplies, feel let-down. T.H. Musthaffa, President of Kerala State Cooperative Rubber Marketing Federation Limited (RubberMark), at a news conference here recently alleged that the Government had backed down from the decision under pressure from the ‘tyre lobby.’

Source: Business Line