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06. May 2006

INDIA: Tyre companies seek suspension of rubber exports: `Domestic production insufficient'

Source: Daily "The Hindu Business Line", New Delhi; 6 May 2006

Kochi , May 5
Tyre manufacturers have urged the Union Government to
temporarily ban exports of natural rubber (NR) from
India to tide over the acute shortage of the commodity
in the domestic market.

In a letter to the Union Commerce Minister, Mr Kamal
Nath, the Automotive Tyre Manufacturers' Association
(ATMA), which represents a majority of the
manufacturers, said the price of NR had escalated by
45 per cent in the past one year and domestic
production of rubber was insufficient to meet the
demand.

"In the altered scenario of NR production in the
country falling short of domestic consumption
requirement, steep escalation in the price during the
last two years, and import to meet the deficit being
an extremely costly option, we are seeking temporary
ban on exports ," ATMA said in the letter.

India exported around 70,000 tonnes of NR during
2005-06. In the current financial year, the Rubber
Board estimates exports to be lower at 50,000 tonnes.

"When domestic production of NR is insufficient to
meet domestic demand, export at this juncture would
further tighten the position, apart from giving
further boost to the already high price of NR in the
domestic market," the ATMA Chairman, Mr Paras K.
Chowdhary, said in the letter.

Difficult option

ATMA said bridging the gap between production and
demand of NR through imports was a difficult option
since international rubber prices were higher than the
domestic price.

Inspite of this, tyre industry was planning to import
20,000 tonnes of natural rubber in the next few
months. "This is because of the apprehension of stock
out position in NR envisaged in the next few months,
with attendant problems of limited stock being chased
by buyers and thereby further escalating market price
and the eventuality of tyre production being affected
for want of NR."

ATMA pointed out that tyre companies would have to
shell out an additional Rs 12000 million and non-tyre
sector Rs 10000 million a year because of the 45 per
cent jump in NR prices. The domestic consumption of NR
is estimated to be around 800,000 tonnes this year.

An ATMA official said even though Rubber Board's
statistics showed that NR production in 2005-06 was a
shade higher than the consumption, this occurred only
because introduction of the four per cent VAT in
2005-06 put paid to smuggling of rubber from Kerala
and this rubber got accounted.

NR prices have risen to record levels world over as
demand outstripped supplies, higher crude prices
pushed up synthetic rubber and various catastrophes
affected production. In the domestic market, prices
are now ruling at over Rs 90 a kg.





(Syed Rashid Ali, Karachi, Pakistan)

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