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India: Small, medium rubber units seek hike in import duty on products

KOCHI, OCT. 29:

Small and medium rubber units have asked for an increase in import duties on finished rubber products to enable local units face the challenge of fast growing cheaper imports.

In a representation made to the Secretary, Department of Industrial Policy & Promotion (DIPP) and Director-General of Foreign Trade (DGFT), the industry body All-India Rubber Industries Association (AIRIA) stated that there were about 5,000 SME rubber units accounting for the largest segment in SME clusters.

However, low import duties on finished goods have rendered Indian manufacturing of rubber products by SMEs uncompetitive in several product areas. A worrisome trend is that manufacturers are turning traders of imported goods leading to loss of jobs and Indian manufacturing getting seriously compromised, states the association.

Quoting import figures released by the Ministry of Commerce Export Import Data Bank, the association said that import of finished rubber products has gone by 100 per cent in the last three years from Rs 3,810 crore in 2009-10 to Rs 7,608 crore in 2012-13.

Unfortunately, most of the imports consists of low quality, low-tech products. While Indian units are capable of manufacturing superior products, they are challenged by cheap products from countries such as China. The most disturbing aspect is that all raw materials for rubber industry attract higher rates of import duty than finished rubber products. While finished goods can be imported at a duty of 2.5 to 10 per cent, the import duty on all key raw materials ranges between 10 and 70 per cent, said Niraj Thakkar, President, AIRIA.

Interestingly, all rubber manufacturing countries have import duties on finished goods much higher than India with a view to protecting the interests of local units.

Amongst the rubber SMEs, the worst affected were dipped rubber goods manufacturers especially balloon manufacturers, who mainly depend on latex as raw material. With import duty of 70 per cent on NR latex, India has lost the competitive advantage of manufacturing dipped rubber goods, despite the technology and availability of skilled manpower, he said.

The balloons from China, Malaysia, Singapore, Thailand and Sri Lanka are being imported at a nominal duty and are far cheaper than Indian manufactured balloons.

According to AIRIA’s estimate, the balloons imported from Sri Lanka have already captured 50 per cent of the Indian market. The association has asked for bringing import duty on finished rubber products higher than that on raw materials so that Indian manufacturers get a level playing field.

Source: The Hindu

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