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Centre to raise import duty on rubber to 25 per cent
13-03-2015

New Delhi: The Union Government plans to hike import duty on rubber to 25 per cent while a slew of other steps are under way to protect the interest of rubber growers, hit hard by declining prices, Commerce and Industry Minister Nirmala Sitharaman said on Thursday.

A methodology was also being evolved to monitor the usage of imported rubber to push domestic demand while an expert committee was examining the issues concerned in-depth, she said in Rajya Sabha in response to a calling attention motion on the plight of rubber farmers.

A proposal to enhance "the existing import duty on dry forms of natural rubber from the existing 20 per cent or Rs 30 per kg to bound-level duty of 25 per cent, has been forwarded with my recommendation to the Ministry of Finance and is under consideration," Sitharaman said.

These measures, she said, would regulate imports and "may have a salutary effect on domestic prices", as she promised enhanced subsidy of Rs 35,000 per hectare, up from existing Rs 25,000, to the growers by the Rubber Board.

"The concern among rubber growers caused by the downward movement in domestic prices of rubber has been noted. ... The government has reduced the period of utilisation under advanced licensing scheme for import of rubber from 18 months to six months," Sitharaman said.

While motivating the rubber consumers to exhaust stocks and push up demand, the government was also working to evolve methods to monitor usage of rubber imported under advance license to ensure that existing stocks are consumed, she said.

Sitharaman said the fall in rubber prices to Rs 118 in November last from Rs 176 in 2012-13 was due to "slump in international consumption" and the resultant decline in global prices. This was aggravated by a relatively low growth in domestic demand for specific forms of natural rubber.

To boost the segment, she said, the government intended to expand production as a long-term strategy and was promoting plantation development programmes in non-traditional regions like the North East.

"Currently, rubber is produced in 7.57 lakh hectares in the country", she said adding, "During the 12th Plan, an area of 36,300 hectares is proposed to be covered under fresh rubber plantation for which an outlay of Rs 726.99 crore has been provided."

Commerce department has also initiated the process of evolving a market-linked insurance based scheme to stabilise prices, Sitharaman said.

She said a draft scheme has been formulated, which would require the approval of Finance Ministry and Cabinet Committee on Economic Affairs. The scheme would be administered by the Commodity Boards through insurance companies and receive support from the government through premium subsidy.

Besides, an experts committee, comprising representatives of rubber growers, state governments, rubber consumers, user industries and other stakeholders, was examining all issues concerning production, development, consumption and exports. Seeking clarifications from the Minister, several members expressed concern over falling prices and demanded a ban on imports or higher import duty besides preventing "hoarding" by tyre manufacturers.

Earlier, while moving a calling attention motion on the plight of the farmers, P Rajeeve (CPM) said 18 lakh families in Kerala were adversely hit by falling prices and this was impacting the state's economy.

Charging the Modi government of only protecting the interests of corporates when rubber farmers were committing suicide, he said, “This government is a government of slogans. It is only for corporates.” He demanded that alleged hoarding of imported rubber by tyre manufactures should be checked.

AK Antony (Congress) said lakhs of marginal farmers were badly hit by falling prices and demanded "substantial" hike in import duty to protect farmers' interests. K C Tyagi (JD-U) said one crore farmers were hit by falling prices, while K N Balagopal (CPM) demanded a check on imports by tyre companies.

Jairam Ramesh (Congress) said it was a critical situation facing the farmers where production had fallen to 6,70,000 tonnes from 9,00,000 tonnes and yield too had declined, forcing India, once a top grower, to occupy fourth slot. He said the subsidy, which the farmers were getting, was barely 8 per cent of the cost of production and demanded a hike in it.