Financial Daily from THE HINDU group of publications
Saturday, Aug 28, 2004
Agri-Biz & Commodities
Industry & Economy - Exports & Imports
Rubber export subsidies may be slashed 50 pc
Vipin V. Nair
Kochi , Aug. 27
THE Government is understood to have decided to cut the subsidies for rubber exports by 50 per cent this year.
Informed sources say RSS-4 grade will get a subsidy of Rs 1.75 a kg against Rs 3.50 a kg last year, Rs 2 a kg for latex and Rs 2.50 a kg for block rubber for the current year.
The Union Commerce Ministry is expected to make an announcement shortly, the sources told Business Line.
This year, the subsidy would be given to rubber exports of up to 50,000 tonnes or lower, the sources said.
Though exports subsidy had been announced only for 50,000 tonnes last year, the Government later extended the incentive to the entire 76,000 tonnes shipped during the fiscal.
The Government offered the subsidy in a bid to boost exports and sagging prices.
Despite being the fourth largest producer of natural rubber in the world, the nation is yet to achieve the status of a major rubber exporting country.
When the subsidy was announced, the goal was to export one lakh tonnes of rubber during the 10th Five Year plan. However, exports have crossed 1.30 lakh tonnes in just two years.
The rubber consuming industries such as tyre manufacturers were of the view that this unexpected surge in exports was one of the reasons for natural rubber prices to skyrocket to record levels in the domestic market at the beginning of this financial year.
Rubber prices crossed Rs 67 a kg in July.
Early monsoons that hampered tapping in Kerala, which produces over 90 per cent of the country's rubber, also led to severe shortage of the commodity in the market.
With prices softening in the domestic market and the decision to lift port restrictions on rubber imports, rubber growers are concerned that doing away with the exports subsidy would further push down prices.
In the first quarter of this fiscal, however, rubber exports recorded a 13 per cent jump at 4,894 tonnes over 4,322 tonnes in the corresponding period last year.
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