Immediately after Kerala chief minister Oommen Chandy confirmed that the Union finance ministry is about to notify a hike in the import duty of natural rubber, from R20 per kg to R34 per kg, the rubber-consuming industry roped in 4,500 rubber SMEs to join its clamour to shout down the hike. According to the SMEs, the import duty on natural rubber cannot be seen as the single major factor in the price differential of rubber.

Since over 90% of the country?s rubber production comes from Kerala, the fall in prices has ruffled the state?s economy. A delegation of ministers led by the Kerala CM met the Union commerce minister and Union finance minister on Tuesday.

?The move to clear a notification hiking the import duty on natural rubber from R20 per kg to R34 per kg is already on,? Oommen Chandy told FE. From R230 per kg last year, natural rubbber prices have nosedived to R160 per kg this year, almost seeking policy intervention, he said.

Alarmed by the imposition of import price curbs on natural rubber, SMEs in AIRIA (All India Rubber Industries Association) have joined hands with ATMA (Automotive Tyre Manufacturers? Association) in urging the commerce, finance and MSME ministries. An increase in the import duty on natural rubber will severely hit 4.5 lakh people working in rubber SMEs, according to the representation by AIRIA.

?There is no significant differential between the current domestic and international prices of natural rubber, which should warrant drastic action on the lines proposed. According to Rubber Board?s data, the price differential between domestic and international prices is currently less than 5%. The key concern of natural rubber growers and their representatives was that there was a significant price differential, to the tune of R20 per kg, and necessitating import curbs was no longer required?, said Niraj Thakkar, president, AIRIA.

AIRIA contests the rubber-grower organisation?s argument that rubber prices can be attributed to imports. It quotes a press release by the Rubber Board, which says that ?Rubber price is a function of several factors.?

Thakkar argues that a panel constituted by the ministry of commerce to examine the duty structure had met on 27 December, 2012, recommending to maintain status quo with regard to the rubber import policy.

AIRIA pleads that the economic slowdown is affecting both the rubber-consuming industry and the rubber plantation sector.