Rubber prices in Kochi market remained steady due to weak trading activities in the last one week.
The decision by the tyre companies to import natural rubber under OGL has affected the undertone of the market badly. It is reported that the tyre companies have contracted to import 8,720 tonne of natural rubber during July and August. In a statement issued by D Raveendran, director general of Automotive Tyre Manufacturers Association (ATMA), 10,000 to 15,000 tonne of natural rubber would be imported in the coming months. This decision, in spite of the pressure from the growers, including UPASI, to import natural rubber has made serious impact in the market.
Last week, the Union government had asked the commerce ministry to fix the minimum price for rubber. This decision was in tune with the direction of the Supreme Court to fix the minimum and maximum price as per Section 13 of the Rubber Act. The import is seen as a move by the tyre companies to control the domestic market. They categorically stated that the protection of the interest of the 10 lakh growers is not our duty.
Meanwhile, ATMA has demanded duty free import of NR as the international price is lower than the domestic price. A statement issued by the tyre companies said that to enable Indian exporters to have a level playing field with their foreign counterparts, duty free import is essential. The procurement of rubber from domestic market will cost 20 per cent extra in the export front hence competitive edge will be lost in the world market, it said. The recent budget of the state government has proposed 15 per cent additional sales tax for all the commodities, including rubber. In fact the traders here told Business Standard that they are seriously thinking of stopping the rubber trading as some of the proposals in the budget are anti NR market.
The budget has proposed 1.5 per cent turnover tax from the traders. This will seriously affect the sentiments of the market. N Radhakrishnan, president, Cochin Rubber Merchant's Association said that the normal profit margin in the rubber trading is around 0.5 per cent and it is very difficult to carry on with the business.
Under this circumstances, the turnover tax is totally against the NR sector, he said.
