KOCHI: Allowing foreign direct investment (FDI) in rubber processing will affect farm gate prices and wipe out small processors in the country, says the Indian Rubber Dealers' Association.

At a press conference here on Friday, George Valy, president of the association, said the Union Government's decisions to allow FDI in rubber processing and warehousing "will immensely harm the existing harmony in the rubber sector."

The policy change will lead to a situation in which foreign monopolies will hold sway over Indian rubber in the long run, he said.

Over a million rubber growers, mostly smallholders, process rubber sheets to earn about 97 per cent farm-gate price, the highest rate prevalent in the rubber-growing world, said Mr. Valy.

The Indian rubber farmer is better off than his counterparts in other rubber-producing countries.

More than 9,000 rubber traders operating in the market ensure that rubber sheets reach customers to their satisfaction. More than 5,000 small rubber goods manufacturers buy rubber sheets alone as they are equipped to use only sheet rubber.

These small units will be in trouble because foreign investors will be keen only on technically specified rubber (TSR). In the end, said Mr. Valy, small rubber manufacturers and traders will be eliminated.

He also pointed out that it might not be possible to set up rubber processing units in Kerala, the State being environment-conscious.

This means that units would be set up in the neighbouring States.

Rubber traders also felt that there was no need for warehousing facilities as the farmers and trade already had the capacity to hold about two lakh tonnes of natural rubber.

"Once the foreign investors achieve monopoly in processing, warehousing and marketing, they are likely to sell rubber produced in India at their own terms," he added.

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