India: Rubber industry counters import duty proposal

Criticising demand for further increase in import duty on national rubber (NR), Rubber consumers have alleged that the argument of imports dampening domestic production is without any merit. Industry however said that falling production of natural rubber is nothing but the Rubber Board’s estimates have gone awry which happens year after year.

Referring to latest data released by Rubber Board, consuming industries have alleged that increase in NR imports had been just a fraction of actual drop in domestic NR production. There were reports that in the light of the steep fall in prices, the Union government plans to increase the import duty on rubber to 30% from the present 20%. This is based on an assumption that the steep rise in imports is the villain behind the fall in domestic prices.

During April – January period of the current financial year import increased 14% at 359,857 tones as against 315,049 tones in the same period of last FY. Total import is likely to cross 400,000 tones in this financial year, which will be the highest ever import to the country. India is likely to consume 1 million tones of rubber in this FY according to the current trends in consumption. This means over 40% of India’s requirement is met through import. All political parties from Kerala are exerting pressure at the centre to hike the duty.

Rajiv Budhraja, Director General, Automotive Tyre Manufacturers Association [ATMA] said that the gap between domestic NR production and consumption has widened to 276,065 tones during the first 10 months of current fiscal. An impression is being created that imports are discouraging the domestic NR production and hence should be further curbed. However, a study of Rubber Board figures proves otherwise. Against contraction in domestic NR production of one lakh tones in the first 10 months of current fiscal, NR imports have gone up by just 45,000 tones.

‘The real worry is that NR consumption has picked up just 3.8% during the first 10 months. Against the backdrop of Make- in- India campaign, the industry should be allowed access to cheaper raw material so that value addition takes place in India”, said Mohinder Gupta, President All India Rubber Industries Association (AIRIA).

According to consuming industries, Rubber Board’s projections in respect of NR production have gone awry year after year with actual production always trailing the projected figures by a long margin. For the current fiscal also, the difference between projected and actual NR production is a staggering 246,000 tones during the first 10 months alone.

According to the analysis of latest NR data, consuming industries have stated that the NR stock figures at the end of January ’15 as given by Rubber Board are distorted. Stock figure is a derived one and is calculated by deducting off-take from availability. Given sharp drop in production, NR stock figures at the end of January 2015 should have declined by 78,000 tones but Rubber Board has brought down the figures only by 28,000 tones only.

Gupta added that there is need to await the outcome of National Rubber Policy formulation, currently underway, which is expected to look at all the aspects of rubber sector.

– Business Standard