Financial Daily from THE HINDU group of publications
Friday, Dec 03, 2004
Agri-Biz & Commodities
Industry & Economy - Exports & Imports
Rubber exporters fret over cut in quantity for subsidy
Vipin V. Nair
Kochi , Dec. 2
RUBBER exporters have expressed the concern that the Government's decision to limit rubber export subsidy to 34,000 tonnes for the current fiscal would further impact the already slowing exports of the commodity.
"There is no doubt that exports will come down," said Prof K.K. Abraham, President of the Pala Marketing Co-operative Society.
Exports of natural rubber in the first six months of 2004-05 fell 34 per cent to 13,243 tonnes from 20,026 tonnes in the same period a year ago. For the full year, exports are likely to touch about 50,000 tonnes, compared with 76,000 tonnes last year.
Exporters say they were taken by surprise when the Government said subsidy would be given only to 34,000 tonnes of rubber exported this year. The rates have also been halved.
Last year, subsidy was given to 50,000 tonnes. However, the Government has agreed to provide the incentive to the additional quantity exported during the year at the previous rates, industry sources said.
As per the notification, export subsidy would be given to only 15,000 tonnes of sheet rubber, 6,000 tonnes of latex and 13,000 tonnes of block rubber. "We have already exhausted the quantity of sheet rubber and latex that will qualify for the subsidy," an exporter said.
This means that any future exports of sheet rubber and latex will not get the incentive. "We are now left on our own. Earlier the subsidy gave us some cushion," said an official with the Kerala State Co-Operative Rubber Marketing Federation (RubberMark).
According to Prof Abraham, many exporters who had factored in the subsidy while pricing their exports would now stand to lose money because of the quantity restrictions.
Since the price difference between Indian and international rubber has shrunk to about Rs 3 a kg, exports will not be attractive any more. The consignments from India have to be routed through the ports of Colombo and Singapore for transhipments, adding to the freight costs.
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