Rubber Board backs 100% FDI proposal in rubber plantation

By: | Published: September 27, 2015 12:32 PM

Rubber Board, under the Commerce Ministry, has backed a proposal to permit 100 per cent foreign direct investment (FDI) into the plantation sector.

Rubber Board, under the Commerce Ministry, has backed a proposal to permit 100 per cent foreign direct investment (FDI) into the plantation sector.

“The Rubber Board is supportive of the proposal. FDI in the sector would help in increasing natural rubber production to meet the growing demand,” an official told PTI.

The Department of Commerce as well as the Department of Industrial Policy and Promotion (DIPP) are discussing the latter’s proposal to permit 100 per cent FDI in rubber and coffee plantation.

A Jayathilak, Chairman (Additional Charge) Rubber Board said that foreign investment is important to make the country self-sufficient in natural rubber.

“India is not self-sufficient in rubber. FDI is important for the sector to enhance production,” Jayathilak said.

The DIPP has proposed 100 per cent foreign investment in these two areas through government approval route with portfolio investment up to 49 per cent under automatic route.

Currently, 100 per cent FDI is permitted only in the tea sector.

Coffee Board is expected to soon communicate its views on the proposal, the official said.

India’s natural rubber import increased to 4,42,130 tonnes in 2014-15, the highest so far, from 3,60,263 tonnes in 2013-14 and 2,62,753 tonnes in 2012-13.

The production of natural rubber declined to 12-year low at 6,45,000 tonnes in 2014-15 as against 7,74,000 tonnes in 2013-14, down 12 per cent. In 2014-15, the consumption was 10,20,910 tonnes with a deficit of 3,75,910 tonnes.

As per the projections, production and consumption of natural rubber in 2025-26 will increase to 1.36 million tonnes and 1.74 million tonnes, respectively.

“The projected deficit cannot be filled with existing and expected domestic investment in the sector. It is reported that there are large tracts of barren lands available in North East and other states which are agro-climatically suitable for rubber cultivation,” the official added.

To boost domestic production of the crop, the government is in the process of formulating a national rubber policy. Total rubber consumption by various industries, including tyre manufacturers, stood at 10,18,000 tonnes in 2014-15, 3.7 per cent higher than the previous year.

Allowing foreign players in these two plantation sectors is part of the several steps from the commerce and industry ministry to boost foreign investments.

In 2014-15, FDI into the country rose 27 per cent to USD 30.93 billion. To pull in foreign investments, the government has raised the FDI cap in the insurance sector and defence. It has relaxed policy in railways, construction and medical devices sectors.

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