Latex is the first stage output of the rubber tree and is processed to obtain natural rubber. Currently import duty on latex stands at 70% even as that on the finished product is less than 7.5%. Latex prices have surged from around Rs 55 a kg in January 2009 to Rs 117 at present, after having peaked to Rs 148. While natural rubber is attracting duty at Rs 20 a kg at current prices, latex is attracting duty around Rs 82 a kg.
The growing demand and prices has prompted All India Rubber Industries Association to write to the Finance Ministry pointing out that the increase in price of latex is threatening the very survival of the latex consuming industry, which comprises mainly of small units. While considering the reduction in customs duty on natural rubber to 7.5% for a limited quantity till 31st March 2011 and subsequently a cap of Rs 20 per kg, the Government should have considered a reduction in customs duty on rubber latex as well.
It is surprising that the import duty on latex has been gradually enhanced from 25% in 1999-2000 to 70%, while that on finished goods has been reduced from 40% to less than 7.5% during the same period. The facilitated import of finished goods is antithetical to the Government's avowed policy of enhancing domestic value addition. A large number of the small and medium scale units are not able to pass the price hike to the consumers, said AIRIA President - Vinod Simon.
Mean while, International Rubber Consortium acting Chief Executive Yium Tavarolit said that IRCo, a consortium of rubber producting countries including Thailand, Indonesia and Malaysia, which collectively account for some 70% of global natural rubber output, will likely convene a meeting with both private and public stakeholders to mull price stabilization measures this week. We will propose that exporters not export rubber at certain price levels that are below market fundamentals.
Read lot more in Rubber4U – 1st April 2011 issue
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