Ban rubber futures, says user industry

Print this page Posted on : 08-01-2007 by recycleinme.com

Neither the rubber planters nor the users want the commodity to be traded on the commodity exchanges, says Mr. K.T. Thomas, President, All-India Rubber Industries Association. The association represents all rubber-user industries, except tyres.

Recently, there has again been a spurt in the rubber prices. Today, prices are ruling at around Rs.83 a kg and the users apprehend further firming up of prices.

Part of the reason, according to Mr. Thomas, is the speculation on the commodity exchange.

The other part is the emerging shortage in production due to a number of plantation workers taking to illness in the recent weeks, but an estimate of the shortfall is not yet available.

Mr. Thomas told Business Line that the commodity exchanges allow prices to vary up to Rs.2 over the previous close on either side.

Thus, effectively prices could swing up to Rs.4 on any day. This kind of movement Mr. Thomas says, does not happen in the spot market.

He said that the AIRIA has written to the Ministry of Commerce seeking a ban on rubber futures trading on commodity exchanges.

EXPORTING RUBBER

The rubber users are also irked by a recent comment made by the Chairman of the Rubber Board asking the planters to export the commodity, Mrs. Thomas said.

He noted that some planters tried to export rubber but suffered losses on account of the rupee appreciation.

India is the fourth largest consumer of rubber in the world.

There are about 5,000 units of rubber-based industries – 30 large scale, about 300 medium scale and about 4,600 small and tiny scale units.

These units employ four lakh people and contribute Rs.4,000 crore to the national exchequer by way of taxes and other levies.

Mr. Thomas reiterated AIRIA’s often articulated dismay over the inverted duty structure affecting rubber imports.

Tyres could be imported at 10 per cent duty. However, the customs duty on imported rubber is 20 per cent.

If the users want to import latex – which is further down in the value chain - they have to pay 70 per cent.

NOT INTERESTED IN KANYAKUMARI SEZ

Tamil Nadu Industrial Development Corporation (TIDCO) is promoting the setting up of a special economic zone in Kanyakumari district, Tamil Nadu, exclusively for rubber –based industries, but the industry does not appear to be enthused over it.

The SEZ, being developed by a joint venture of TIDCO and AKSA Technologies Ltd, received the “in-principle approval” of the Government of India in January 2006.

They said that their markets were around Chennai and raw material sources were in the Kottayam area. “We would rather put up units near Chennai”. said Mr.R.K. Raman, Chairman of MIL Industries Ltd and a past-President of AIRIA.

Source : Business Line