No other country has penalised consumers by hiking duties or imposing restrictions
Ever since prices of natural rubber started falling, rubber producers have been demanding curbs on import.
The Government, too, went ahead and increased the import duty by ₹10 per kg.
Demand from growers for further hike in import duties continues.
As the Government gears up for a National Rubber Policy, Mohinder Gupta, President, All India Rubber Industries Association (AIRIA), speaks to BusinessLine on the vexed issue of rubber imports. Edited excerpts:
How do you view the demand to curb rubber imports?
Any decision on rubber imports should be an outcome of a well thought-out policy rather than a knee-jerk reaction.
The gap between rubber production and consumption in India is widening.
Imports are inevitable to sustain rubber products’ manufacturing in the country.
Yet, import duties on rubber in India are one of the highest in the world. The industry is, in fact, suffering from inverted duty.
Despite domestic deficit, rubber is subjected to 20 per cent duty while finished rubber goods can be imported at less than half of that duty.
Any further curbs on import of rubber will make Indian manufacturing highly uncompetitive.
The National Rubber Policy is in the offing and we are hopeful it will take a holistic view of the rubber sector.
Don’t you think the industry needs to take into account the plight of rubber growers as well?
Against the popular perception, we are all for a vibrant plantation sector and would welcome any move by the Government to support the planters.
However, it should not be at the cost of the manufacturing sector.
In the global market, we are in competition with China and other rubber products manufacturing countries.
While they are able to access raw material cheaply, we are being subjected to barriers such as high import duties.
That makes it an uneven playing field for us and Indian industry’s competitiveness is being affected.
On the allegation that rubber prices have fallen due to imports?
The fall in prices is linked to softening of commodities globally. However, Indian rubber prices have continued to rule higher than international prices.
In each of the first seven months of current fiscal, the average price of domestic rubber (RSS 4) was higher than comparable prices in Kuala Lumpur and Bangkok.
Growers believe that with softening of rubber prices, industry is making profits at their cost?
The industry has witnessed a harrowing phase following spiralling rise in rubber prices in the not-so-distant past. As SMEs operate on a thin margin, a sudden and unprecedented rise in rubber prices hurt the industry gravely.
Now that rubber prices have come down from their peak levels, there is no room for complacency.
The threat of cheaper import of finished rubber products is growing. India’s trade deficit in rubber products (non-tyre) with some of the key trading partners has gone up substantially.
As a matter of fact, many of the rubber producing countries are going up the value chain by producing and exporting rubber products instead of raw material.
Will the Government’s plan to hike import duty on block rubber from 20 per cent to 25 per cent help lift the rubber price?
Any increase in customs duty on block rubber will be a retrograde step having far-reaching adverse and irreversible consequences for rubber consumers.
The Kerala government is already charging five per cent Purchase Tax on rubber and block rubber.
If the Union and Kerala State governments wish to support growers, it should be done directly by way of a subsidy to them as has been done by other major rubber producing countries such as Thailand, Malaysia, Indonesia, Sri Lanka.
No other country has penalised or affected their respective rubber consuming interests by hiking duties or imposing any other restrictions.
What is your view on Indian block rubber industry?
The block rubber industry has got the capacity to fulfil the demand for block rubber in India.
However, severe shortage of good quality raw material is preventing the industry from making the required quantity.
During the current year more than 28 factories are lying closed for want of raw material and factories which are continuing to produce are able to utilise not more than 40 per cent of their capacity.
Block rubber is preferred over sheet rubber by producers and consumers.
However, the Centre has disallowed the block rubber industry from importing its raw material.
The Indian Block Rubber industry which was developed by the Rubber Board is coming to a slow but sure end.
– The Hindu
