Tyre units demand duty free rubber imports
The widening natural rubber deficit in the country has prompted the tyre industry to seek duty free imports of rubber equivalent to the projected domestic deficit, saying that the 25 per cent import duty is hurting its price competitiveness.
The emerging situation has led to the domestic scarcity of the raw material, as the industry consumes 65-70 per cent of natural rubber. A drastic drop in deficit as projected will only increase the industry’s dependence on expensive imports, said Satish Sharma, Chairman, Automotive Tyre Manufacturers Association (ATMA).
Quoting the Rubber Board’s revised figures, he pointed out that the Board has projected a domestic output of 7.3 lakh tonnes (lt) and consumption of 11 lt for the FY 17-18 and a deficit of 3.7 lt (higher than the figure of 3.5 lt in the previous year).
Earlier in the year, the Board had projected a deficit of 2.7 lt which has recently been increased to 3.7 lt. In the process, the gap as a percentage of consumption has increased from 25 to 34 per cent.
Adding to the industry’s worry is the fact that from mid-February onwards the lean production period will commence which will last till September. So, availability will be significantly curtailed in the off-peak months.
On priority, the industry has asked for import of NR 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 natural rubber which is permitted to be imported only at two ports (Chennai and JNPT) further adding to the cost and delays.
Refuting the argument that rubber imports were suppressing domestic production, ATMA stated that the domestic rubber prices have been ruling 10-20 per cent higher than the international prices. Despite that, the domestic production is getting fully consumed by the industry with hardly any exports. That reaffirms the contention of the tyre industry that imports are being contracted only to meet the rubber deficit. Earlier in the year, when domestic rubber availability improved, the imports came down drastically.