A new Indian step has put Bangladesh's rubber export in peril, reducing the price of the item by one-fourth in the domestic market, officials said.
Last month, India amended its import policy and specified that natural rubber import will be allowed only through seaports in Chennai and Jawaharlal Nehru port in Maharashtra.
As a result, Indian traders from West Bengal, who have been importing rubber from Bangladesh through Benapole-Petrapole land port, have stopped sourcing the item from here due to increased cost.
"The cost has increased by 15 per cent due to mandatory carrying through ships via Singapore instead of land port. As a result, West Bengal- based traders have stopped import rubber from Bangladesh," secretary general of the Bangladesh Rubber Garden Owners' Association Kausar Jamal told the FE.
He said per tonne of rubber was selling at Tk 110,000 in the local market before India issued the new directive. "Now the price of the item has come down to Tk 80,000 per tonne and we are not getting buyers."
"India has created the barrier to give protection to its growers as Bangladesh is highly competitive in Indian market in rubber export due to low carrying cost," Mr Jamal said.
He said the directive on import of rubber only through sea ports in Chennai and Maharashtra will remain valid until March 31. "We want the barrier not extended after the period."
Rubber import from the SAARC countries to India is subjected to 15 per cent duty while import from the rest of the world 30 per cent duty. The low duty for SAARC members and low carrying costs through land ports made Bangladesh highly competitive in rubber export to India.
Former secretary general of the association ATM Jafrul Alam told the FE the Indian government provides cash incentive to local rubber growers' considering the item as agriculture product.
Some of the growers import rubber from Bangladesh in big volume through land ports but statistically show less. They show the remaining volume of rubber as local production and take incentive from the government, he said.
The government of India has moved to allow rubber imports only through seaports to keep actual tally of import of the item.
Mr Alam said as carrying the item through ships involves increased cost, West Bengal-based traders have stopped importing the rubber from Bangladesh.
Recently, the ministry of environment and forest (MoEF) in a letter to the ministry of foreign affairs (MoFA) requested for taking steps so that India reinstates the facility of rubber import through the Benapole-Petrapole land port.
It said due to long distance, increased transportation cost, and other complications, traders from West Bengal would not be interested to import rubber of the Bangladesh Forest Industries Development Corporation (BFIDC) through seaports in Chennai and Maharashtra.
During the 2013-2015 period, traders from West Bengal had imported natural rubber worth US$9.26 million from the BFIDC.
The country's total export of rubber and rubber goods in fiscal year 2014-15 was $20.18 million.
In the country, some rubber is being cultivated in nearly 0.1 million acres of land. The BFIDC, private sector Chittagong Hill Tracts Board, and different tea estates and small-scale planters produce rubber.
Other than India, Bangladesh exports rubber to China, Malaysia, and some European countries in very small volumes.
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