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Thursday, August 11, 2022

Rubber SMEs ask for tougher import duties on as imports double in 3 years

Small and medium rubber units have asked for urgently increasingimport duties on finished rubber products to enable local units face the challenge of fast growing cheaper imports. In a representation  to the Secretary Department of Industrial Policy & Promotion (DIPP) and Director General of Foreign Trade (DGFT), All India Rubber Industries Association (AIRIA) has stated that there are about 5,000 SME rubber units in the country accounting for the largest segment in SME clusters. However, low import duties on finished goods has 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.

Quoting  import figures released by Ministry of Commerce Export Import Data Bank, AIRIA has stated that import of finished rubber products has gone by 100  per cent  in the last three years from Rs 3810 crore in 2009-10 to Rs 7608 crore in 2012-13. Unfortunately most of the import consists of low quality, low-tech products while Indian units are capable of manufacturing far superior products but are challenged by cheaply imported products from countries such as China.
“The most disturbing aspect is that all the 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 to 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 protect the interests of local units. For instance the import duty on Rubber Rice Dehusking Rollers is just 2.5 per cent  in India while the same is up to 80 per cent  in China.
Referring to rubber growers demand to increase duty on natural rubber, he added, both NR growers and consumers are part of the same value chain. There is dire need to have a National Policy on Rubber on the lines of National Policies for Petroleum, Textiles and Information Technology.
Unless there is a strategic vision to ensure the growth of this potentially high growth sunrise sector through appropriate policies aimed at both NR producing and consuming interests, India may soon lose the exalted status in rubber sector. “The National Policy on Rubber will hold a vision with well defined signposts and the role all the stake holders in the industry need to play for the industry to achieve desired scale and size’, Thakkar said.
Amongst the rubber SMEs, the worst affected are 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.
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 Indian market. It is feared that the Indian balloon industry might get wiped out in five years. The Government could save the local balloon manufacturers by correcting this anomalous duty structure between the imported Raw Material (latex) and the imported product (balloon).
Similarly rice mill rubber rollers manufacturers are facing severe competition from imported rollers coming from China, Vietnam and other South Asian Countries. Rice, a major produce of India, has majority of de-husking rollers being imported with a  duty of 2.5 per cent only.  The raw material for rollers is synthetic rubber (NBR) which attracts a duty of 10  per cent .The inverted duty in rice rollers is forcing manufacturers to shut down their units and turn importers/ traders leading to thousands of job losses.
AIRIA 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. It stated that the industry must be consulted before signing Free Trade Agreements (FTAs) with various nations as there are 78 rubber products which are currently affected due to inverted duty structure.
Source: Business Standard

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