"Suspension of import of natural rubber is not going to achieve the purposed end result, which was to prop up domestic market price of rubber," Automotive Tyre Manufacturers Association (Atma) said in a letter to the Government.

In the letter written by Atma director general to Ajit Kumar, secretary, industrial policy and promotion department, the tyre makers said considering the total consumption of over 6.5 lakh tonnes of rubber annually and with a stock of about two lakh tonnes in the country, ban on import of natural rubber would not lead to the desired result.

On January 25 last, the Centre in a notification disallowed import of natural rubber under the advance license scheme. Natural rubber imports are allowed into the country only under advance license against exports ofrubber goods. The ban was imposed following a recommendation from the Rubber Board in an effort to stabilise natural rubber prices, which slid to a seven-year low towards the end of 1998.

Natural rubber prices in the country have slid since mid-1997 due to production outstripping demand, which has been hit by a slump in the transport sector. Atma pointed out that annual import of natural rubber was between 15,000 tonnes and 25,000 tonnes and reduction of this from a stock of two lakh tonnes would hardly have any bearing on domestic market price.

The carryover stock of natural rubber from 1998-99 to the current financial year has been estimated to be 1.91 lakh tonnes provisionally but the industry expects it to touch two lakh tonnes.

Stating that tyre makers had opposed the ban on imports on the ground it would have minimal effect, Atma said its stand had been vindicated by market trend of prices. "The initial euphoria subsequent to stoppage of advance license import, took the market price up by Rs 2-3 akg. However, subsequently, market prices had slided back to the original levels," Atma said.

Tyre makers uses sheet and crumb rubber and while quality of sheet rubber in the country was excellent, quality of crumb rubber did not meet standards prescribed by industry, it said.

Some quantity of rubber imported were of crumb type, the association said, adding due to the ban these companies do not have access to procure such rubber now. Though the commerce ministry had stated that crumb rubber could be bought from State Trading Corporation (STC), which has been authorised to procure crumb rubber from the domestic market, the issue was the quality was not upto the market standards, Atma said.

Suspension of rubber imports had also added to the factors responsible for decline in tyre exports, which was likely to fetch Rs 900 crores in 1998-99, it added.