The furore over diminishing price of natural rubber vis-a-vis stockpilling has prompted the government to reconsider the upward revision in the benchmark price. Ironically the rubber goods manufacturing industry hitherto have been paying a price, much higher than the benchmark price fixed for natural rubber and no attempt was ever made by the government to make the plantation sector adhere to the benchmark price or impose and a price discipline.

When the benchmark price for natural rubber was fixed at Rs 24.90 per kg., in February 1994, average productivity per hectare was 1286 kgs. This now has gone up to 1505 kgs in 1996-97 and must have achieved new heights in 1997-98.Hence the cost of production has obviously come down correspondingly, nullifying justification for any upward revision of benchmark price. Besides the extra payment of Rs 4100 crore by the rubber manufacturers to the rubber planters over and above the bench mark price, the rubber industry is paying the cess of Rs 1 per kg to the Rubber Board to subsidise the rubber planters for improving productivity and modernise rubber plantation. During the last 50 years, the industry had paid a handsome sums to the planters, irrespective of world prices which were often half that of the the Indian prices. The manufacturers are in addition paying a purchase tax of 11 per cent to the Kerala government, which is anxious to get a share of the enormous profits earned by the planters.

It is obvious that the Indian rubber manufacturers had to bear the brunt of continuance of the protectionist policy of the government.

AIRIA therefore has suggested that instead of jacking up the benchmark price the government should considerabolition of 11 per cent state sales tax and one per cent cess on rubber which is being paid by the consumers. The growers will only be benefited as these element of tax and cess will then get integrated with the natural rubber price.

The country is moving fast towards the globalisation. Each year hundreds of items are being put under the OGL. And the past experience shows that once these items were put under OGL, imports in large quantities took place. The rubber based industries have to compete with the imported goods. Given this situation, the demand by the rubber units for a level playing field enabling them to import raw materials becomes totally justified, argues the organisation.

This argument is gaining ground as the government has rubber industry rawmaterials like synthetic rubbers, carbon black, etc under the OGL. The association also questions the protection provided only to natural rubber. There is an Import duty of 25 per cent on natural rubber. Even if this commodity is put under OGL, thereis a duty protection against unnecessary imports.

Taking all these into account, AIRIA is of the view that natural rubber should be put in the free trade list at the earliest. The Indian rubber based industry plays a major role in the economy contributing Rs 3000 crore by way excise duties, import duties and cess to the national exchequer. Hence, says the association, the government should take a balanced view.