Lower domestic prices to fuel rubber exports

Paving the way for further increase in exports of rubber, the gap between global and domestic prices continues to remain wide, with Indian prices still lower by Rs 15 a kg than overseas prices.

The price of benchmark grade, RSS-4, is quoting at Rs 106 a kg while Tocom recorded a tag of Rs 121 in the June contract, today.

Although the domestic market had crossed the Rs 100 mark on May 19, the prices, on an average, were lower by Rs 14 than global prices for the last three-four months, which has reflected in both exports and imports.

According to Rubber Board estimates, during April 1 to June 14 (of the current financial year), India exported 14,380 tonne, while total exports during the same period in 2005-06 were just 763 tonne. There has been a sharp rise of more than 1,800 per cent in natural rubber exports.

The lower domestic price tags are keeping up the export momentum, though there some chronic problems hurting the prospects of Indian rubber such as poor quality and absence of international standard in weighing.

Till the end of 2002-03, domestic natural rubber could not draw much buying interest across the global market owing these very factors.

During the same April 1 to June 14 period, imports dropped 31 per cent to 11,665 tonne, from 16,961 tonne in the same period of 2005-06.

During the entire year 2005-06, imports were 45,285 tonne, while exports stood at 73,830 tonne. There are enough indications that in the first 10 weeks of 2006-07, exports will surpass Rubber Board's target of 50,000 tonne rather easily.

India had maximum exports at 75,960 tonne in 2003-04, mainly on account of the export subsidy scheme.

A rubber dealer said if the current difference in price tags continues for the whole of the current financial year, exports might even exceed 1,00,000 tonne.

In that case, the market will face shortage of rubber as domestic consumption and production are almost on par.

And this in turn is likely to push up the prices. But again, the monsoon, being a key factor in production, will determine the actual volume of exports.

At present, all parameters, including the global ones, are favourable for a sharp increase in exports from India in 2006-07.

For tapping the overseas market or exports potential, Jairam Ramesh, minister of state for commerce, in his recent visit to Kerala asked Rubber Board to submit a report on projecting India as a quality natural rubber brand.