In a paper prepared by MF Vohra, chairman western region, All India RubberIndustries Association (AIRIA) the multiplicity of taxes and duties and itscascading effects have rendered the industry lame. The high energy andtransaction costs coupled with poor infrastructure are the major constraintsthe Indian rubber industry is facing. It is difficult to comprehend how theindustry would be able to gear itself up against the WTO regulations. Thegovernment instead of taking positive steps to assist the industry to facethe WTO regulations have taken certain retrograde steps which will have anadverse effect on the industry's endeavour to make it cost effective andupgrade its technical standards. The constraints which need immediateremedial action include the high cost of natural rubber, the main rawmaterial, the paper states. In spite of India being the fourth largestproducer of natural rubber in the world and also having a highest perhectare yield of more than 1550 kilograms, the industry cannot procure theraw material at internationally competitive price and quality.

The cyclical pattern of rise and fall of rubber prices, an internationalphenomenon should be accepted by the Indian rubber growers. The growersshould prepare themselves to face such fluctuations in price and have toevolve a mechanism of providing built-in cushions and buffers to safeguardagainst a downswing in price.

However when the rubber price sky-rocketed four years ago, the growers werecomplacent and when the price skided due to low offtake particularly fromthe Indian tyre industry, growers forced the government to stop import ofnatural rubber even under DEEC scheme. The annual imports under AdvanceImport Licenses account for only about 25000 metric tonnes of naturalrubber. The stockpile of natural rubber was indicated at nearly 180,000 MT.

Unless demand is stimulated across the board in rubber consuming industry,the subject ban cannot be expected to yield any tangible result, the paperstates. On the contrary it will act as an impediment for outsourcing of thebasic raw material input for export production at international quality andprice levels. Further, the STC has neither the expertise nor the ability tooperate this scheme innovatively. The country is thus exposing itself to WTOstrictures due to the subsidies being given on the supplies of naturalrubber being made by STC. Moreover it is clear that the STC is unable tohandle indigenous supply of natural rubber than the RSS-4 grade. The policyof the government in this regard is not only short sighted but excruciatingto to export growth which is evident from the fact that the export of rubberproducts in dollar terms during the year has gone down.