"We propose to take up with government the setting up of a rubber exchange so that forward trading can be introduced and surplus rubber can be disposed of," All India Rubber Industrial Association (AIRIA) president PD Lakhani told an inter-association meeting last evening.

Stability of natural rubber prices was very important to ensure remunerative returns to growers and it would also help the industry to work out its plans without any uncertainty, he told a meeting got up to felicitate his election as AIRIA president here.

Besides proposing the setting up of an exchange for forward trading, aira would attempt to remove any "misunderstanding" between growers and consuming industry.

A meeting between the association and growers' representatives would be held soon to discuss issues of common interest, Lakhani said.

His statementassumes significance in the wake of criticism by the rubber consuming industry of government's initiatives in announcing a revised benchmark price (BMP) and ordering market intervention to stabilise rubber prices.

Last month, government revised the BMP for rubber to Rs 34.05 a kg for RSS4 grade from Rs 24.90 fixed in February 1994.

Simultaneously, prices for RSS5 was fixed at Rs 33.55 a kg.

The government also asked the STC to procure 20,000 tonnes from nominated agencies as part of market intervention operation, besides deciding that the procured rubber would either be exported or sold against surrender of advance import license by rubber goods exporters, including tyre makers.

Referring to the south-east Asian meltdown and recession in the domestic automobile industry, Lakhani said AIRIA would focus attention on these problems, including arranging loans for small scale units.

He also said AIRIA would demand for allowing natural rubber import under open general. At present, rubber imports is underrestricted list, though rubber goods exporters can import under advance license against export of rubber goods.

The slowdown in the automobile sector has led to natural rubber consumption being lower than total production.

During 1997-98, only 5.79 lakh tonnes of rubber was consumed against a production of 5.84 lakh tonnes. The trend is likely to continue during the current fiscal.