‘GST may hit natural rubber prices hard’

‘No clarity on rates for some products’

With lack of demand from micro and small industries due to ambiguity on Goods and Services Tax (GST), prices of natural rubber are likely to decline in the coming months.

The price has dipped from Rs. 143 per kg in April this year to Rs. 129-130 per kg (as on Wednesday). This price drop may accentuate in the months of October and November, which is the peak production season.

Further, imports still continue despite the low prices of domestic material, weakening the domestic demand and prices.

“We are entering into a growing season when abundant local material will be available to the consuming industry. Thus, suitable policies need to be brought in to restrict imports during these high cropping months to improve prices and prevent melt down of this strategic industry,” said B. K. Ajith, secretary, Association of Planters of Kerala.

There are some input materials which have gone into the bracket of higher taxation, adversely affecting the grower and increasing the cost of production. Some examples are plastic shells for tapping, fungicides, sheet rollers and other processing equipment and this needs to be reviewed and corrected.

“There is some confusion on the tax rates for certain products made out of rubber like rubber bands etc., which needs to be clearly defined and settled,” said Mr. Ajith.

The non-tyre industry, which comprises micro and very small business, has been adversely affected due to factors such as size,turnover and capacity to weather the implication of the new regulations. Most in the industry have very low turnover and are not registered under GST, which provides for exemption as unregistered producer.

Unregistered producer

However, being an unregistered producer has disadvantages in terms of claiming refund on taxes paid as well as dealing with buyers who will have to discharge the tax liability incurred for the grower.

“This has led to lack of demand from thousands of these small industries which are struggling to cope up with the new ways (GST) of doing business,” said Santhoshkumar, senior vice-president, Harrisons Malayalam Ltd., of RPG group.

Though GST recognises unregistered buyers, rubber buying and trading mandates licence as per the Rubber Act.