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Tyre makers to urge Govt to rescind ban — Following SC ruling on rubber import under advance licence

M.R. Subramani

CHENNAI, May 12

TYRE manufacturers are likely to urge the Government to rescind the ban on import of natural rubber through advance licence scheme following the Supreme Court's order upholding a Bombay High Court ruling holding the ban null and void.

"Once we get the certified copy of the Supreme Court ruling, we will approach the Government," an Automotive Tyre Manufacturers' Association (ATMA) official told Business Line. The copy of the ruling is expected anytime this week.

"If not rescind, we will urge the Government to issue a notification that rubber can be imported through advance licence scheme," the official said.

Last week, the Supreme Court had dismissed a special leave petition filed by the Union Government against a Bombay High Court ruling that struck a notification issued to ban import of rubber under advance licence scheme. Imports under advance licence are duty free as they are against exports of rubber goods.

The Government had banned such imports to help buoy rubber prices that declined sharply since 1998-99. The ban was challenged in the Bombay High Court, which in September last year held it as "null and void".

However, according to trade sources, the tyre makers are likely to face a tough time despite the apex court ruling. This is because the Supreme Court had only told the Government that it could not be approached for merely changing the policy.

"The Bombay High Court had only said the Directorate-General of Foreign Trade (DGFT) could not ban imports. And the Supreme Court has only upheld this. The Government is still free to amend its policy," trade sources said.

According to tyre manufacturers' sources, ATMA members are likely to meet sometime in the next fortnight to decide on the future course.

The ATMA official said: "The meeting will be following the Supreme Court order. Until July, we will have no problem as 30,000 tonnes have already been contracted for imports. We will have to look into the price of rubber and import costs before deciding on further import."

Both tyre manufacturers and traders concede that it is too early for a clear picture to emerge. On Monday, sheet rubber or RSS 4 was quoted at Rs 47,500 a tonne, unchanged from the rate that ruled when the Supreme Court gave its ruling. However, it is still lower from the seven-year high of Rs 51,000 a tonne it touched on April 7.

The market has remained stable as it feels the apex court ruling has been factored in. But tyre manufacturers say they will consider even Rs 40,000 a tonne as "very high".

But the growers say the demand-supply situation will dictate the prices. "The global trend is bullish and, therefore, the prices will tend to be firm," a plantation industry source said.

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