Date:15/10/2004 URL: http://www.thehindubusinessline.com/2004/10/15/stories/2004101500961200.htm

Back Rubber export subsidy: Finance Ministry seeks clarification

Vipin V. Nair

Kochi , Oct. 14

THE Union Finance Ministry is learnt to have sought certain clarifications from the Commerce Ministry on the proposal to give subsidy for rubber exports in the current financial year, according to industry sources.

"The Finance Ministry has sought certain clarifications on the matter of export subsidy for rubber and sent the (relevant) file back to the Commerce Ministry," the sources said.

Despite repeated attempts, Government officials were not available for comment.

The Union Commerce Minister, Mr Kamal Nath, had in September announced that the Government would continue to give the subsidy for rubber exports during 2004-05, but at half the last year's rate.

As per the new rates, the RSS-4 grade will get a subsidy of Rs 1.75 per kg (Rs 3.50 per kg last year), while the latex will get Rs 2 per kg and block rubber Rs 2.50 per kg.

The Government offered the subsidy for rubber exports in a bid to boost exports of the commodity from the country. Despite being the fourth largest producer of natural rubber in the world, India is yet to achieve the status of a major rubber-exporting country.

When the subsidy was announced, the goal was to export one-lakh tonnes of rubber during the 10th Five Year plan. However, exports crossed 1.30 lakh tonnes in just two years. For the current fiscal, the subsidy will be applicable for only 50,000 tonnes.

However, the Government is yet to issue orders sanctioning the subsidy. The rubber industry was abuzz with rumours that the Finance Ministry had turned down the proposal to give the subsidy for the year.

The sources pointed out that the Finance Ministry had only sought the clarifications and it was just a matter of time before the orders were issued.

However, exporters are worried over the delay in promulgating the orders. Many of them have contracted export orders after factoring in the subsidies while quoting prices.

"Many exporters are not taking fresh orders now. They are waiting for clarity on this issue," the sources said.

Rubber prices had fallen below the Rs 50-mark in the second week of September but active buying by exporters had propped up the prices later.

The difference of Rs 5-7 per kg between the Indian and international prices coupled with the announcement of export subsidies enthused exporters to get active in the market.