With the domestic production of rubber nosediving by 16 per cent in February, the tyre industry has urged the government to make imports easier through lowering of duties to meet the growing demand.
Quoting data released by the Rubber Board, the industry said rubber production in February 2018 stood at 52,000 tonnes against 62,000 tonnes produced in the same month last year.
Strong demand
For the first time, the consumption has crossed a million tonne (1,003,060 tonnes) mark in the 11-month period (April-February FY18).
On the other hand, the production is just 6.4 lakh tonnes (lt) during the period leaving a yawning production-consumption gap of about 3.6 lt.
Rajiv Budhraja, Director-General of the Automotive Tyre Manufacturers Association, said that the tyre industry has been passing through a challenging phase as far as raw material availability is concerned.
The industry has put in significant production capacities to meet the demand from automobile industry and transportation/mining sector.
Domestic supplies low
However, production planning is seriously undermined as domestic availability of rubber is in awfully short supply. As much as 35 per cent of the requirement needs to be met by imports.
The domestic availability is in short supply despite the fact that average domestic prices have been ruling 11 per cent higher than international prices during the year. The exports have come to a grinding halt and the entire domestic production is being picked up by the industry.
While imports are imperative to keep the plants running, India levies the highest import duties on rubber in the world.
The industry has asked for duty free import of rubber equivalent to the projected domestic deficit as high import duty is hurting the price competitiveness of the industry.
Consumption pattern
The tyre industry consumes 65-70 per cent of the rubber produced in the country. Adding to the industry’s worry is the fact that lean production period has already commenced which will last till September. So, the availability will be significantly curtailed in the off peak months.
“On priority, industry has asked for import of rubber on a tariff rate quota (TRQ) basis at ‘nil’ rate of duty to the extent of gap between domestic production and consumption. It has also asked for removal of port restrictions on rubber which is permitted to be imported only at two ports (Chennai and JNPT) further adding to the cost and delays”, Budhraja said.
