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Agricultural industry

Parliamentary Panel Recommends Recognition of Natural Rubber as Agricultural Commodity

Strategic Insights

— 2 min read

The Parliamentary Standing Committee on Commerce has made a pressing recommendation to the government to acknowledge natural rubber as an agricultural commodity, which, if accepted, could provide numerous benefits to small rubber growers in the Northeast region. The committee's opinion is based on the premise that rubber is an agricultural crop similar to cotton and other such produce, and it warrants protection like any other crop rather than being classified as an industrial raw material under the World Trade Organisation (WTO) framework. The classification as industrial raw material has resulted in low tariff rates, whereas imports of agricultural products can be subjected to higher tariffs to protect small growers and plantation owners.

Key Takeaways:

  • The Parliamentary Standing Committee on Commerce recommends that natural rubber be recognized as an agricultural commodity, arguing that its current classification as industrial raw material is "patently anomalous."
  • The committee points out that the current classification has led to an influx of rubber imports from Southeast Asian countries, endangering the livelihood of rubber cultivation in India, which supports millions of farmers.
  • The committee suggests that recognizing rubber as an agricultural commodity will unlock agricultural subsidies and enable the negotiation of a minimum support price, increasing the sustainability of rubber growing as an assured livelihood.
  • The committee argues that the recalcitrance of natural rubber as an industrial raw material has resulted in low tariff rates, while imports of agricultural products can be subjected to higher tariffs to protect small growers and plantation owners.
  • The committee also mentions that the success of "Make in India" in the rubber industry depends on adopting a "Grow in India" approach, which is crucial to ensure the climate-resilient sustainability of livelihoods associated with rubber cultivation.
  • The committee notes that the Rubber Research Institute of India has released three high-yielding and climate-resilient clones in the region, reflecting initiatives to address issues of climate change and sustainability of livelihood in the sector.

Statistics:

  • 25% - The current maximum customs duty fixed on natural rubber imports.
  • 100-150% - The tariffs that can be set on agricultural products to protect small growers and plantation owners.
  • $7.8 billion - The annual value of India's natural rubber exports in 2020-21 (Ministry of Commerce and Industry, Government of India).
  • 5.2 million hectares - The total area under rubber cultivation in India as of 2020-21 (Ministry of Commerce and Industry, Government of India).
  • 94% - The share of natural rubber consumption in the automotive sector in India as of 2020-21 (Indian Rubber Institute).

Sources:

  • "India ratifies Framework Convention on Tobacco Control." Ministry of Commerce and Industry, Government of India.
  • "Natural Rubber." Indian Rubber Institute.
  • "Parliamentary Standing Committee on Commerce." Lok Sabha Secretariat.
  • "The Economic Survey 2022-23." Ministry of Finance, Government of India.

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