To help growers, rubber import duty hike likely

NEW DELHI, FEBRUARY 4:

The Centre is looking at raising import duty on natural rubber to protect domestic growers against cheap imports and check a further fall in prices. The duty hike could be announced in the Union Budget.

“The Commerce Ministry has proposed to the Finance Ministry to increase the duty on natural rubber from the current 20 per cent to 30 per cent,” a Government official told BusinessLine.

Rubber growers have been asking for a higher increase in import duties, with some demanding that it be raised to 75 per cent. “Such a sharp rise would hit rubber users such as tyre manufacturers. We can’t allow that as all interests have to be kept in mind,” the official said.

With international rubber prices dropping to a seven-year low, imports have increased several-folds forcing domestic prices down to a five-year low. On Wednesday, RSS-4, which is used mainly by various industries, was quoted at ₹122 a kg at Kottayam and Kochi.

Rising imports

In the first three quarters of the fiscal, rubber imports increased by 24.89 per cent to 3.26 lakh tonnes compared with the same period a year ago.

Rubber growers argue that their conditions are worse off because of the tyre industry’s preference for cheaper rubber from South-East Asian countries such as Indonesia, Vietnam and Thailand.

Low prices and demand have also dealt a blow to domestic production with several farmers either stopping tapping or reducing acreage. According to industry estimates, production in the first three quarters this year was lower by 17.33 per cent at 5.17 lakh tonnes compared with the previous year.

“We don’t want domestic rubber production to stop because of cheaper imports. That is why we think there is indeed a case for raising duties,” the official said.

Rubber growers associations such as UPASI, APK and IRGA have sought imposition of safeguard duties (levies imposed to check a sudden surge in imports) on rubber and have submitted a petition to the Directorate-General of Safeguards. In order to take a balanced position on rubber keeping in mind all interest groups, the Government is formulating a National Policy for the rubber sector. An expert committee has been constituted to evolve a suitable regime for production, consumption, manufacture, and imports of rubber in the short term and long term.

– The Hindu