Financial Daily from THE HINDU group of publications
Wednesday, Jun 22, 2005
Agri-Biz & Commodities
Industry & Economy - Exports & Imports
Imports hit crumb rubber producers
Kochi , June 21
WITH prices falling and domestic offtake remaining low, crumb rubber producers are in dire straits, as their installed capacities are grossly under-utilised, according to the Cochin Rubber Merchants Association.
"Against their installed capacity of over 1.50 lakh tonnes, they produced only 79,530 tonnes last year. No industry can run at 50 per cent capacity for long," said Mr N. Radhakrishnan, President of the association, in a statement.
He said exports of crumb rubber or Technically Specified Rubber (TSR) from India picked up from 2,637 tonnes in 2002-03 to 19,807 tonnes the following year and the tempo in growth was maintained during the first half of 2004-05.
"Suddenly, the Government withdrew the incentive scheme in the later half of 2004 without any rhyme or reason. Meanwhile, the consuming industry was allowed to import crumb rubber without any restrictions, resulting in a 400 per cent increase in imports during the past three years," he said.
The Government had cut the export subsidy for crumb rubber to Rs 2.5 a kg in 2004-05 from Rs 5 a kg. For the current financial year, there is no such incentive available.
Currently, the prices are around Rs 55 a kg. According to the association, crumb rubber imports jumped to 50,720 tonnes in 2004-05, over 12,763 tonnes in 2002-03.
Its production, however, fell to 79,930 tonnes last fiscal from 81,405 tonnes two years ago.
Crumb rubber consumption in 2004-05 was 1,14,290 tonnes, up from 98,205 tonnes in 2003-04. "Sudden withdrawal of export incentives and substantial increase in imports played havoc with production and marketing of indigenously manufactured crumb rubber," Mr Radhakrishnan said.
Since Indian crumb rubber factories use scrap rubber as their raw material, the cost of production is higher than in other producing countries such as Thailand and Indonesia.
While the capacity of units in other countries range from 150 tonnes to 200 tonnes a day, Indian crumb rubber factories have production capacities of five to 20 tonnes.
"To compete in the international market, incentives are needed," he said, urging the Government to restore the incentives at the rates that prevailed in 2003-04.
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