Small Growers Oppose Import Duty Cuts on Natural Rubber, Import Duty on Natural Rubbers in India, Delhi High Court Asked Government to Consider on Rubber Import Duty, Down Import Duty on Natural Rubber

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Lakshmi Krishnakumar | 07 Jun, 2010
Small growers in northeast India are a concerned lot after the Delhi High Court asked the government to "consider carefully" the user industry's demand to bring down import duty on natural rubber - a move that they feel can disturb peace.

"Bringing down the import duty will adversely affect us farmers. We are small growers and not capitalists. We depend on larger inputs from a small area of cultivation," said John Millik, 26, a farmer from Karbi Anglong district of Assam.

The May 17 high court order came on a petition filed by the Indian Cycle and Rickshaw Tyre Manufacturers Association, the Automotive Tyre Manufacturers Association and the All India Rubber Industries Association.

They urged the court to ask the government to regulate natural rubber prices by removing duties, fixing a price band and banning futures trade in the commodity. They also want the import duty on natural rubber to be brought down from 20 percent to 7 percent.

Millik feels that along with economic growth and development, rubber has helped curb separatism and insurgency to an extent in the region.

"Most youths are unemployed, illiterate and poor, and are easily persuaded to hold arms. But with cultivation that is sustaining and rewarding like rubber, extremism has come down to a certain level.

"Prospects of rubber plantation motivated us to take up this cultivation and I think the trend will grow, if the prices do not fall," he said.

However, ATMA is pressing ahead with its demand, arguing that the import duty on finished product should be higher than the raw material itself.

An ATMA official said: "Usually the import duty on finished product is higher than the raw material but here the import duty on natural rubber (raw material) is 20 percent while on tyre (finished product) is only 10 percent.

"If that is not possible, then we demand the import duty on tyre to be increased," he added.

The rubber growers have slammed the user industry's demands.

The Indian Rubber Growers Association (IRGA) general secretary and vice chairman of the Rubber Board, Siby Monipally, told reporter that this was an attempt by the user-industry to regain supremacy in the rubber market to dictate prices to its advantage.

"They don't want market forces to play its role. This is with an ulterior motive to damage rubber industry and interests of farmers in India," Monipally said.

"Take the example of Kerala. Rubber is a Rs.10,000 crore industry there. Kerala was not affected by the global meltdown due to rubber cultivation. We have also recorded inclusive growth in the northeast," he said.

The secretary and founder of the Mendhpather Multipurpose Cooperative Society in Meghalaya, sister Rose Kayathinkara, said: "I initiated rubber cultivation in Garo Hills. The development we have witnessed has been steady and progressive. The import duty in no way should be brought down.

"The youth here has suffered a lot from poverty and unemployment and they end up being part of extremist groups but rubber cultivation has helped them think different and has generated employment and income to many," she added.

There are an estimated 1.4 million farmers in India and almost seven million households that benefit from the cultivation indirectly generating employment opportunities.

"Rubber plantation has a gestation period of at least seven years. So for the growth level to be sustained, the market prices have to be favourable to small growers," Monipally said.

Members of IRGA and the rubber board will meet Prime Minister Manmohan Singh and Commerce Minister Anand Sharma with requests to maintain import duty at 20 percent and not ban futures trading on natural rubber.