The Hindu Business Line : Plea to scrap subsidy on natural rubber exports

The domestic tyre makers have said the subsidy gives an unfair advantage to tyre exporters in other countries in their competition with tyre exports from India.

New Delhi , Jan. 2

THE domestic tyre industry has petitioned the Central Government to discontinue with effect from April 1, 2004, the existing subsidy scheme on export of natural rubber. The submission comes even as there are indications that the Commerce Ministry may move the Planning Commission to extend the scheme beyond March 31, which is its current expiry date.

In a note to the Planning Commission and the Department of Commerce, the Chairman of the Automotive Tyre Manufacturers Association (ATMA), Mr Raghupati Singhania, has said there is no justification for continuing the subsidy in the current changed circumstances.

The domestic tyre makers have also said the subsidy gives an unfair advantage to tyre exporters in other countries in their competition with tyre exports from India. It has been highlighted that access to cheaper natural rubber from India due to the in-built subsidy component could boost the competitiveness of those tyre makers who source such rubber from India.

With the approval of the Planning Commission, the Ministry of Commerce and Industry had introduced a scheme in April 2001 for grant of subsidy for the export of natural rubber from India. The subsidy was Rs 3.50 per kg of natural rubber exported.

The Kerala Government introduced a similar scheme with the same rate of subsidy. This was, however, discontinued in December 2002.

In its note, ATMA has also said the international price of natural rubber has in the recent past been prevailing higher than the domestic natural rubber price. "In such a situation, the subsidy by the Indian Government further widens the gap between Indian and international prices of natural rubber, thereby giving an unfair and unwarranted (lower price) advantage to tyre companies/exporters in other countries at the cost of domestic user industry (tyre and rubber goods sector in India)", the ATMA note said

While pointing out that the association has raised the issue of subsidy only after two years of the introduction of the scheme, the ATMA note said providing subsidy for exports in the initial stages could be understood and accepted in the context that export of all items from India should be encouraged.

"However, such subsidy should not become a permanent or long-term one, more so when no such subsidies are being given to any non-agricultural item exported," the ATMA has said.

Natural rubber exports from the country during 2002-03 stood at 55,300 tonnes as against 7,000 tonnes in 2001-02.

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