Govt may lower rubber import tax: Adviser.

The government may cut the tax on rubber imports to Rs 20.46 (44 cents) per kilogramme (kg) from the current 20% levy, rejecting tyre makers' demand for a steeper decrease, a government policy adviser said.

The proposed fixed duty would equate to around 12% at current prices. Tyre makers had called for a cut to 7.5% as booming automobile sales drive a sharp rise in rubber demand and imports.

"The government is not likely to concede the industry's demand of bringing rubber import duty to 7.5%, but there may be a ceiling of Rs 20.46 per kg," Toms Joseph, economist involved in policy at the state-run Rubber Board, said.

The Rubber Board is a statutory body set up by the government for the development of India's rubber industry.

India, the world's fourth-biggest rubber producer, imported 75,042 tonne during April to August this year, mainly from Thailand, Malaysia and Indonesia.

Strong local demand helped domestic prices soar above international rates, but the gap has narrowed, Joseph told Reuters on the sidelines of a conference in the city of Coonoor in southern Tamil Nadu state.

"Farmers and traders have started releasing stocks. It will reverse the July-August trend when Indian prices were substantially higher than international prices," he added.

Spot rubber prices in India hit a record Rs 18,600 per 100 kg in August and tyre makers struggled to pass on the rise in the raw material cost to consumers.

The differential with Bangkok prices has since come down and the Indian spot price was Rs 16,800 per 100 kg on Monday, compared to Rs 16,352 in Bangkok.

But the price of rubber from Thailand, the world's top exporter, is expected to rise as the Thai baht hit a 13-year high against the dollar.

Joseph said India's rubber imports in the year ending March 2011 will be over 100,000 tonne, in line with trade expectations of about 110,000 tonne.

India is likely to produce 893,000 tonne of rubber in 2010-11, while its consumption is pegged at 978,000 tonne.

Source : moneycontrol.com