The decision came close on the heals of pleas by the rubber industry and traders to ban the import of natural rubber to save over 9 lakh growers from peril. The Rubber Board had also earlier urged the commerce ministry to stop the imports of natural rubber by tyre companies against the Advanced Licence Scheme (ALS). Following the news on the import ban, rubber prices improved on the primary Kottayam market.

However, the decision, if not followed by pro-active measures would have no medium to short-run impact on the rubber market, feel traders. In the short-term, the market may go up slightly, they said.

The decision to impose the ban on natural rubber import against ALS was taken by Union commerce minister Ramakrishna Hegdeduring the ministry's consultative committee meeting held at New Delhi on Monday. The minister took the decision over-ruling the arguments of special licencing officers to allow further imports of natural rubber under ALS, sources in the Rubber Board said.

"It has been decided that holders of ALS with NR as one of the inputs should purchase their requirement of rubber from STC at or below international prices," the order issued by the commerce ministry said. The ban on imports of NR boosted the sentiments in the market immediately. The prices closed on Monday and Tuesday at higher levels.

However, the decision may not have any medium to long-term impact on rubber prices, feel traders. Whether the decision holds good for the next fiscal was not known, Cochin Rubber Merchant's Association president N Radhakrishnan said.

Already manufacturers had imported over 15,000 tonnes of NR and contracted for another 10,000 tonnes for the current fiscal, taking the total to 25,000 tonnes for the current fiscal, hesaid. Unless the government procured 50,000 tonnes of NR immediately at least at Rs 30 per kg, the situation would turn worse after the initial buoyancy, he said.

Imports had done a great deal of damage to the rubber industry sending the stocks up considerably in the past, he said. The carryforward stock was agreed to be at 36 months; 45 days by industry, 15 days in transit and 45 days as stock with traders, he said. However, the industry had slashed stock levels from 45 days to 15 days on an average, leading to stockpiling of stocks. The carryforward stock was estimated to go up to six months if import was allowed or to five and a half months if imports were not allowed by the end of the current financial year, he said.