Latex users seek import duty cut

Written by M Sarita Varma | Thiruvananthapuram | Updated: Mar 19 2011, 09:17am hrs
After price of RSS-4the premium grade rubber sheetgot glued to the R200-plus price territory, both the rubber consuming industry and growers are eyeing the potential of trading in liquid rubber latex.

Indian latex-using industryincludes condoms, medical gloves, toy balloons, etchas demanded customs duty cut from the present level of 70%, to ease latex imports. In a letter to ministry of finance this week, All India Rubber Industries Association (AIRIA) has also sought permission for immediate import of 5,000 tonne at zero-duty.

First of all, its the domestic shortage of latex for the industry that alarms us. Secondly, the landed cost of imports, at the current duty structure is worrying, Vinod Simon, president, AIRIA told FE.

The domestic latex industry has asked for immediate correction in inverted duty structure on natural rubber latex on the lines of natural rubber done recently. Another demand is for fixing the minimum and maximum price of latex.

The domestic latex price has been hotting up over the last two years. What AIRIA argues is that the import duty on latex stands at a significant 70% while that on finished products it is less than 7.5%.The price of latex has gone up from around R55 a kg in January 2009 to R117 currently, touching R148 recently. AIRIA has urged for the social consideration due to small industry. It is mostly MSE (medium and small enterprises) units, making items like balloons, hot water bottles, feeding bottles, foam mattresses, medical and surgical articles and some sports goods, who use rubber latex.

The association points out that these small units cannot afford to pass on the price increase to the end-consumers.

Simon says that the industry had been expecting some solace in the recent Budget. On the contrary, the import duty on latex has been gradually enhanced from 25% in 1999-2000 to 70 % currently while that on finished goods has been reduced from 40% to less than 7.5% during the same period. This is even against the governments avowed policy of enhancing domestic value addition he adds.

So far, the Union government had been looking at natural rubber and rubber latex as co-existing products. Liquid rubber latex is the first stage output of the rubber tree. This is processed to yield natural rubber. For natural rubber, a prescribed quantity of imports had been allowed at just 7.5% duty till March end. But rubber latex did not get this consideration. In effect, according to AIRIA, where natural rubber takes R20 per kg duty, latex has to deal with duty to the tune of R100 per kg.

Interestingly, the domestic rubber growers are also warming to the trade possibility of latex, but unlike AIRIA, at the export counter. The domestic latex price, at this point, is low enough, to make exports viable. Early this week, Rubber Board chairman Sheela Thomas had urged latex producers to focus on building a steady flow of latex exports. Export of latex from India, so far, has remained sporadic.

Rubber Board reconstituted

The Union government has announced reconstitution of the Rubber Board. According to an official release, PJ Kurien, MP, will represent the Rajya Sabha on the new Board. Nalin Kumar Kateel and Jose K Mani, both MPs, will represent the Lok Sabha for a period of three years. The release said director (plantation) and undersecretary (plantation) would represent the department of commerce of Union government.