‘GST may hit natural rubber prices hard’: 

‘GST may hit natural rubber prices hard’

Context

  • The 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 dipping prices of rubber

  • The price has dipped from Rs. 143 per kg in April this year to Rs. 129-130 per kg.
  • This price drop may accentuate in the months of October and November, which is the peak production season.
  • Imports still linger despite the low prices of domestic material, weakening the domestic demand and prices.
  • Entering into a growing season with abundant local material available to the consuming industry, 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.
  • 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.

Challenges

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