The Rubber (Promotion and Development) Bill, 2022, introduced to repeal Rubber Act (1947) and reorient Rubber Board with equal focus on rubber cultivation and industry has ruffled a few feathers.
Rubber Board acts as an interface between rubber growers, industry, and government. The Bill drastically alters the board’s composition (Section 13), denying the fair representation the Act ensured growers and major rubber producing states. Sections 8B and 22A of the Act provided for Central Government to consult Rubber Board before issuing any policy directives. The Bill removes this provision, denying the board of its crucial advisory role which has been due since 1947.
The Bill provides for Central Government to supersede and reconstitute a fresh board, take and implement decisions through any person it decides, keeping Rubber Board in the dark (Sections 7 and 8), and take full control of the rubber industry (Section 39). Thus, the new Bill gives unbridled power to Central Government and undermines the board’s authority and functional relevance. This is the most poignant change the new Bill brings to Rubber Board.
Growers’ interest
Unlike Rubber Act, the Bill explicitly defines rubber plants, estates, production, and wood as rubber industry (Section (2)(v)). This has far-reaching legal implications. E.g., recovery of bank loans of growers under SARFAESI Act (2002). Bringing rubber estates under Central Government control may have constitutional implications. Like Rubber Act (Section 13), the Bill also gives Central Government power (Section 30) to fix minimum/maximum price for rubber which contradicts WTO norms. Instead, if natural rubber could be renegotiated at WTO as agricultural produce, which looks difficult, growers can benefit under the de minimus rules. This may be the only way to ensure growers get a fair price.
The Bill does not provide for Rubber Board to purchase rubber that the Act had allowed in Section 8A. When rubber price falls below the international market, the Board should buy rubber and export using funds it is allowed to borrow (Section 22). Without this, the minimum price serves no real purpose. Capping the maximum price will only benefit the industry.
Rather than fixing price limits, growers should be assured of a fair price which is essential to sustain rubber production and industry. The Bill is silent on this. Section 3(iii) provides for promoting rubber export, but this smacks of poor understanding of rubber economics and contemporary realities. Exporting rubber, a raw material with immense scope for value addition and vital to industrial growth is simply bad economics.
Industry focus
Synthetic rubbers, which were not in vogue when the Act was enacted, are indispensable to the modern rubber industry. Synthetic rubbers and the production and export of rubber products also should be brought under the ambit of the Bill so that all components of the rubber industry will be under one umbrella making planning, monitoring, and control more effective.
A certificate of registration with the Rubber Board is sufficient for anyone to buy and sell rubber (Section 7). A penalty of Rs 10,000 for violating conditions of the certificate is too small to deter potential violators who do businesses worth crores of rupees. Section 29(1) provides for restricting/prohibiting import/export of rubber, but not rubber products. Situations may arise warranting restricting the export of rubber products in the public interest. The soaring demand for medical gloves during the Covid pandemic is a case in point.
The Bill provides for ensuring the quality of rubber produced in India and not imported rubber (Section 20(2)(k)). This can result in the import of cheap low-quality rubber. Already there is pressure from the highest levels to allow the import of cup lumps of uncertain quality.
The Bill fails to appreciate the role rubber plays in providing livelihoods to more than 1.3 million small growers. A mission mode approach to replant old/senile estates that dent the production curve and a vision to match rising demand and declining rubber production are conspicuously missing. Growers are concerned that the Bill doesn’t safeguard their legitimate interests. Historically Rubber Board has always endeavoured to nurture an organic and symbiotic relationship between industry and growers. Disrupting this will be to the ultimate disadvantage of both and undermining Rubber Board will hasten the process.
(The author is a former director of Rubber Research Institute of India, Rubber Board, Kottayam, and chairman of International Rubber Research and Development Board, Kuala Lumpur, Malaysia)