Supply crunch and indifference of growers towards tapping drove natural rubber prices 12 per cent higher this month in the Indian market grossly outpacing a marginal pickup in the global rates.
The rubber price touched Rs 140 per kg on Wendesday, 12 per cent up from the beginning of the month. The international price is around Rs 27 per kg lower.
“Low prices discouraged the growers. Moreover, there was an uncertainty over the Keralagovernment’s price incentive scheme this year. Many small growers didn’t even install rain guards for tapping,” said George Valy, president of Indian Rubber Dealers Federation.
The state government on Tuesday gave the approval for the implementation of price incentive scheme in the current year, which ensures Rs 150 per kg for small growers having up to two hectares. The difference between Rs 150 and Rubber Board published figures will be credited directly to the account of the growers. The government has earmarked Rs 500 crore for the scheme in the budget. The scheme has been popular with around 4 lakh growers registering under the scheme in the last year.
“Now with the scheme in place we should see a rise in output. The total rubber output during the year could reach 8 lakh tonnes ” Valy said.
The consuming industry, meanwhile, has been keeping a low inventory in view of the GST implementation. ” In the non-tyre industry rubber mainly goes as intermediate products. It has been currently put in 18 per cent bracket with some products at 28 per cent. We have requested for a maximum slab of 18 per cent with most of the products placed in the 12 per cent slab,” said Kamal Chaudhary, president of All India Rubber Industries Association.
As the industry is mostly unorganised it would take at least six months for the players to get adjusted to the new system. ” For the tyre industry this time may be much smaller as it is organised,” Chaudhary said. The tyre industry is also expecting the sales to pick up in the second half of the year.
The global prices showed a tendency to rise in the last couple of days after the announcement by the consortium of Thailand, Indonesia and Malaysia that it is considering a cut in exports to prop up the prices.