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PRESS TRUST OF INDIA
New Delhi, Oct 30: Indian tyre makers are likely to buy an additional 2,000 tonnes of natural rubber from the public sector State Trading Corporation (STC) against advance import license, industry sources said on Friday.
This follows a request by the Automotive Tyre Manufacturers' Association (ATMA) to tyre companies to buy additional rubber following a tri-partite meeting between ATMA, director-general of foreign trade (DGFT) and STC on Tuesday.
However, the procurement of additional quantity would be left to individual tyre companies and depend on whether the firms have advance licenses, they said.
The tri-partite meeting was called to urge tyre-makers to lift more rubber from the STC, which had procured 9,6000 tonnes of the commodity as part of market intervention operations last year to lift its prices.
Simultaneously, STC would also segregate the lots which are of poor quality or have been affected by moisture.
he DGFT had also suggested the formation of a committee at the commerce ministrylevel to dispose of the inferior quality rubber.
STC officials, when contacted, refused to divulge details of the meeting.
The tyre companies have already agreed to buy 3,000 tonnes of rubber from STC.
Of the 3,000 tonnes of rubber, the tyre companies have committed to lift, 1,900 tonnes has already been bought with Ceat making the maximum purchase of 800 tonnes. The companies are also set to lift another 800-900 tonnes soon.
Tyre companies came forward to buy the rubber procured by STC after prime minister Atal Bihari Vajpayee announced in may last that the public sector star trading house would buy 20,000 tonnes of rubber this year as part of market intervention operations.
The announcement was made after concern was expressed over the decline in rubber prices, which fell to a five-year low in April last.
While announcing the STC procurement, Vajpayee also said the procured rubber would either be sold against surrender of advance licenses or exported.
The tyre-makers purchase from STC wasbogged down by `trading technicalities', including the corporation's refusal to allow the companies pre-inspection facility.
The procurement gained momentum once the differences were sorted out.
During the tri-partite meeting, ATMA pointed out the poor quality of rubber and even suggested that STC sell the 2,000 tonnes of rubber procured this year.
However, STC refused to sell the newly-procured rubber saying it wanted to sell the old stock first.
Tyre companies then suggested that the inferior quality rubber could be sold to non-tyre firms, especially footwear manufacturers.
It was then the DGFT suggested the formation of a committee to identify ways and means to sell of the inferior quality rubber.
ATMA, while putting across the difficulties faced by tyre-makers in buying rubber from STC, also pointed out that most of the companies do not have advance licenses as they have shifted to the duty entitlement passbook (DEPB) scheme for their imports.
Under DEPB scheme, any items under restrictedlist of imports is not allowed to be shipped into the country.
Natural rubber is in the special import license list.
Under the advance license scheme, tyre companies can import rubber against export of rubber goods.
STC is selling RSS four grade rubber, procured from nominated agencies, based on the prices in Bangkok market. When a sale is effected, the average prices of previous week is taken into consideration.
Besides, STC also charges six per cent of the total cost towards freight and transport but allows a discount of Rs 500 per tonne.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
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