The rubber and tyre industries have contested the argument that imports of natural rubber (NR) in India were much higher than domestic production deficit leading to distress in the rubber sector, as alleged by United Planters Association of Southern India (UPASI) recently.
Quoting Rubber Board data, the industry has pointed out that against NR production-consumption gap of 2.55 lakh tonne in the April-October period of the current financial year, 2.52 lakh tonne of NR has been imported.
“NR imports are even less than domestic production-consumption gap. Where are the ‘unbridled imports’ as UPASI has alleged?” asked Mohinder Gupta, president, All India Rubber Industries Association (AIRIA).
Gupta said that the planters themselves would justify NR imports to the extent of domestic deficit in rubber. But UPASI’s argument that imports are hurting the interests of growers is flawed, according to AIRIA. “The industry is at the receiving end of a punitive duty structure. Ideally, the import of NR to the extent of domestic deficit should be at nil rates of duty but the government levies a hefty 25% import duty. Duties on NR import are much higher than on finished products, making the industry uncompetitive”, Gupta said.
At the same time, UPASI has accepted the fact that the cost of NR production in India is higher as compared with other NR-producing countries. “The government and Rubber Board need to fathom why the cost of NR production is the highest in India. Why can’t we incorporate better plantation practices and techniques so that efficiencies increase, cost of NR production comes down and the Indian rubber sector becomes competitive? Why should industry be penalised with higher duties?” he asked.
The Automotive Tyre Manufacturers Association (ATMA) has also contested that NR imports have led to a decline in prices in India. “NR prices in India continue to be 20-25% higher than international prices. And yet, the entire domestic production is getting consumed by the industry. Imports are imperative as there is acute domestic shortage,” according to Rajiv Budhraja, director-general, ATMA.
“Overall NR consumption in India has contracted in the first half of FY 2015-16, reflecting the decline in Indian value addition. Coming in the wake of the government’s unmistakable emphasis on manufacturing, that is a worrying signal. As shown by the latest statistics, tyre production is down in India and so are tyre exports. Stiff import duties on natural rubber and indiscriminate import of Chinese truck and bus radials have gravely affected domestic tyre manufacturing operations,” added Budhraja.
The rubber industry urges the Union government to take a holistic view of the concerns of stakeholders. According to ATMA and AIRIA, merely curbing the import of NR as a knee-jerk reaction will be “a recipe for disaster”.
