KOCHI: As rubber prices continue to slide, a sub-committee of the panel to formulate National Rubber Policy is meeting in Kochi next week, which among other things would discuss steps to boost domestic demand for rubber and insulate farmers from steep fall in prices.
Ahead of the peak season of November-January, the rubber prices are likely to remain subdued as tyre manufacturers have already stock-piled for most of the requirements during their off-season procurement by taking advantage of lower prices in the international markets.
In September alone, manufacturers have bought 80,000 metric tonnes of natural rubber, a 33 per cent increase from last year’s 60,000 metric tonnes.
In the April-October period, manufacturers have imported 2.63 lakh metric tonnes of rubber, about 40,000 metric tonnes higher than last year, keeping them in the safe zone in coming months, dealers said.
Further, subdued European growth forecast and fall in crude prices, which are having an impact on synthetic price too, would mean rubber price would remain lower in the near future. Indicating the trend is prices in Bangkok where the commodity is traded at `100/kg while in Vietnam it is another `7/8 lower.
The rubber prices are at their lowest in more than five years and adding to the farmers’ woes is lower demand from China due to slowing economic growth there.
An official in the Rubber Board told ‘Express’ that the delay in the government decision to procure rubber at `5 per kg over the prevailing market price, though the announcement was made on October 15, also dampened sentiment.
The Kerala State Co-operative Marketing Federation (Marketfed) started buying rubber at `5 extra for RSS4 and RSS5 grade from Friday.
According to the Rubber Board official, the government should frame the national policy with a long-term view while in the short-term they could rectify and reverse the inverted duty structure.
“Our import duty on natural rubber is higher while for finished products it is lower. We could hike the import duty on natural rubber from 20 per cent to 25 per cent without coming under WTO lens,” the Board official said.
On a long-term basis, the proposed new National Rubber Policy should aim at promoting smaller rubber-based product manufacturers, besides helping them in exports by giving proper incentives. “There are at least 50,000 small rubber-based product manufacturers in India. They are currently facing the heat due to lower import duty from finished rubber products. This inverted duty structure should also go, said the official, adding this would boost local demand for natural rubber.
Small rubber-based product makers should also be provided subsidy or other financial incentives for technological upgradation. “All these steps should be considered while framing the new policy,” the official said.
India could also take a leaf out from steps taken by other rubber-growing countries to protect their farmers.
For instance, Thailand plans to introduce steps worth $1.8 billion to shore up rubber prices. Thailand, Indonesia, Malaysia and Vietnam have decided to refrain from selling natural rubber below current prices while Cambodia, the Philippines and Papua New Guinea pledged support to improve prices and prevent small holders from suffering further losses.
– newindianexpress.com
