Rubber planters wary of Thai free-trade pact
Reuters | Apr 17, 2007
Rubber planters wary of Thai free-trade pact
By Biman Mukherji
NEW DELHI (Reuters) — Rubber planters will oppose any move to cut the duty on imports from Thailand, the world’s largest rubber producer, as part of negotiations of a free-trade agreement.
India hoped to conclude a free-trade agreement with Thailand by the end of June that would boost total two-way trade by 30 percent a year, the government said last week.
"We don’t want any bilateral agreement approving lower tariff on rubber imports from Thailand," said Ullas Menon, secretary general of the United Planters Association of Southern India.
"We will be meeting federal ministers to put our viewpoint across strongly."
The government said on Friday that Thailand had requested market access for natural rubber.
"The Indian side, while taking note of the request, made no commitment, whatsoever, for reduction of tariff on natural rubber," the government said in a statement.
But that has not eased market concerns.
Output in India, the world’s fourth-largest rubber producer, rose to 853,000 tonnes in the 2006/07 fiscal year that ended on March 31, up 6.3 percent from 802,625 tonnes in the previous year, according to the state-run Rubber Board.
Domestic consumption, mainly by tyre makers, was 820,000 tonnes in 2005/06, about 2.4 percent higher than a year earlier, it said.
Rubber Board Chairman Sajan Peter said domestic prices for rubber of 91.50 rupees per kg were below world prices of 99 rupees.
"What then is the need for imports?" he said.
Producers are worried that a free-trade pact with Thailand would see the import duty cut to 5 percent, or even abolished, from a rate of 20 percent now.
Tyre makers said they planned to import some natural rubber this financial year to ensure adequate supplies and keep a check on domestic prices.
"Our plan is to import about 100,000 tonnes, if there is no loss (on import prices). If there is going to be a little loss, then it could be 80,000 tonnes," said D. Ravindran, director general of the Automotive Tyre Manufacturers Association.
He said the tyre makers imported about 84,000 tonnes in 2006/07.
"Even if it is slightly costlier, we may import to improve domestic availability. Some growers sit on rubber produce in the hope of getting higher prices," Ravindran added.
Domestic rubber growers said they were worried that lower customs duties would lead to a surge in imports. "If imports of rubber are allowed in large quantities, it will affect the growers here. We are apprehensive about it," said another senior Indian rubber industry official, who did not want to be identified.
The Rubber Board’s Peter said domestic output was expected to reach 875,000 tonnes in 2007/08, enough to meet demand. And if there was a jump in domestic consumption, it could be met from 160,000 tonnes of carry-over stocks, he said.
