Govt not to check rising rubber prices

Amid soaring rubber prices, the government on Tuesday ruled out any intervention to arrest the rising prices of the commodity. The government will allow the market forces to determine the prices of rubber, a senior commerce ministry official said Tuesday.

"Rubber growers are rejoicing. We do not intend to interfere to curb prices of natural rubber," the official said.

Rubber prices have risen 10 per cent from a year ago. The prices Monday flared up to Rs 60 per kg. Prices are likely to reach as high as Rs 80 a kg if immediate steps are not taken, said Ashok Khurana, a trader with the National Multi Commodity Exchange of India.

"In my view, something should be done about rising prices. Otherwise, there will be a mayhem in the market," he said.

The ministry official said: "Why should we put our foot down? If rising rubber prices are hurting the tyre companies, they have the option to import the key raw material under the advance licencing scheme."

Tyre and tube companies buy 47 per cent of the total rubber output. Tyre companies have already been importing the commodity and the sector just needs to raise the level of sourcing of rubber from the international market, the official said.

"We do not see any problem in procurement of rubber from the global market as the peak customs duty has been brought down to 15 per cent from 20 per cent."

Minister of State for Commerce E V K S Elangovan this month asked tyre companies to buy rubber, steel and petrochemical-based raw materials from the international market as the domestic prices of these important raw materials have gone up substantially.

"We want to assure the rubber consuming industries like tyre that there is no need to panic as about 6,000 tonne of rubber are already being imported every year," the official said.

Rubber prices in the international market can also go up on the talks of International Rubber Consortium""Thailand, Indonesia, and Malaysia""inviting Vietnam to join them. The consortium is an informal group of major rubber producing countries.

India produced 751,000 tonne of rubber in 2004-05. The output is likely to go up 3.9 per cent to 78,000 tonne this year.