'Volatile futures have hit rubber trade'

Trade Talk - Sajan Peter, chairman, Rubber Board

in an interview. Excerpts:

What measures has the Rubber Board taken to tackle volatility in futures trade?
We are very anxious about the volatile futures as they have a negative impact on the trade. The daily fluctuation in prices, which went as high as 6 per cent in March, should be limited to 2 per cent. I will take up the issue with the newly appointed chairman of the Forward Markets Commission (FMC) soon. I have also brought the issue to the notice of the ministry of commerce. The board had already convened a meeting of the stakeholders of natural rubber and they agreed that measures should be taken to curb price manipulation in futures trade.

Any move to cut import duty on natural rubber...
I don't think import duty on rubber would be slashed. A duty cut is not inevitable as India is almost at par with the global market on the price front. Some time ago, the commerce ministry had sought the board's views on the duty cut. We had strongly expressed our concern over the duty reduction.

How do you see the supply-demand and the pricing trends in the global market?
I don't think rubber prices will come down sharply. This is because of increasing consumption and tight supply position in the global market. China has increased rubber imports recently. Growth in consumption exceeds production worldwide.

How do you see the domestic production and consumption in the current financial year?
The country will see a normal 800,000-plus tonnes of production this year. Last financial year, we expected a shortage in production of around 10,000 tonnes. But by the end of FY07, production marginally exceeded consumption. This difference is expected to be marginal again in the current financial year.

What are the steps taken by the board to improve quality standards and production?
We have submitted a proposal to construct 25 de-humidified warehouses, five each year, during the 11th Plan to store rubber for a longer period. The estimated cost of each warehouse will be Rs 50 lakh and the project will be implemented in association with the Rubber Producing Societies (RPS).

What are the proposals to enhance domestic output?
The board had already recommended to increase the subsidy for re-planting rubber during the 11th Plan. We propose to raise per hectare subsidy to 25 per cent.