India may raise import duty on natural rubber by 70 pct - sources

Last Updated: Wed, Feb 27, 2013 07:40 hrs

MUMBAI, Feb 27 (Reuters) - India, the world's fourth largest rubber producer, could increase import duties on natural rubber by 70 percent as early as Wednesday in order to support falling local prices, two industry sources and one government official told Reuters.

The government wants to fix import duties at 34 rupees per kg, or 20 percent, whichever is lower, said an official with the state-run Rubber Board, who declined to be named. The existing duty is 20 rupees per kg, or 20 percent, whichever is lower.

Domestic rubber prices have fallen nearly 20 percent in the last five months on sluggish demand and a 19 percent surge in cheap imports. India imports natural rubber from Malaysia, Thailand and Indonesia.

"The commerce ministry has assured members of parliament from Kerala about raising the duty. Probably today the government will issue a notification," said a senior official with a leading tyre company, who declined to be named.

The southern state of Kerala accounts for nearly 90 percent of India's natural rubber production.

On Tuesday, the spot price of the most-traded RSS-4 rubber (ribbed, smoked sheet) in the Kottayam market in India was 15,650 rupees per 100 kg, while Malaysian SMR 20, which Indian tyre makers prefer to import, stood at 15,818 rupees.

That would put a 20 percent import duty at 31.64 rupees per kg on the Malaysian SMR 20 imports.

Indian spot prices will be updated around 0630 GMT.

Indian natural rubber imports in the first 10 months of the financial year that started on April 1, 2012 were 19 percent higher year-on-year at 197,113 tonnes.

Thai RSS3 rubber changed hands at $2.97 to $3 per kg for March-May, its lowest since November, while Indonesia's SIR20 was sold at a two-month low of 130.25 to 131.25 cents/lb for March-April, after Tokyo futures plunged from a 10-month high, dealers said on Wednesday. (Reporting by Rajendra Jadhav; Additional reporting by Lewa Pardomuan in Singapore; Editing by Jo Winterbottom and Miral Fahmy)

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