Indian Natural Rubber

Tyre makers want Customs duty cut on natural rubber

Our Bureau

Mumbai, April 22 The Automotive Tyre Manufacturers Association (ATMA) has urged the Government to reduce the custom duty on natural rubber imports to 7.5 per cent from 20 per cent.

Mr Rajiv Budhiraja, Director-General, ATMA, said: “With the custom duty on tyres at 10 per cent and on natural rubber at 20 per cent, a serious situation of inverted duty structure has obtained whereby the duty on raw material (natural rubber) is significantly higher than the duty on the finished product (tyres). The situation contravenes the current policy of the Government to encourage value addition through indigenous production of finished products.”

Drawing a comparison with cotton, Mr Budhiraja said natural rubber and cotton had striking similarities — in that both are the key industrial raw materials for manufacture of finished products and grown in a few States. Like in the case of cotton, natural rubber accounts for a substantial percentage of raw material cost of finished product and deserves similar import duty cuts.

According to ATMA, natural rubber, in fact, deserves more sympathetic and urgent consideration as the existing Custom duty on natural rubber is 20 per cent as against the 10 per cent custom duty on cotton. The Government is exploring possibilities of reducing import duty on cotton from 10 per cent to 5 per cent.

As per ATMA estimates, there has been a 5 per cent increase in consumption of natural rubber while the production has dropped by 3 per cent in 2007-08 over the previous year. In order to meet the shortfall and avoid stock out situation affecting tyre production, 100,000 tonnes of natural rubber on adhoc basis needs to be allowed for import without any import duty, says the tyre body.

In its recent interactions with the Ministry of Commerce, ATMA has stated that peak customs duty on non-agriculture goods has progressively reduced from 50 per cent in 1996-97 to 10 per cent in 2007-08, while the custom duty on natural rubber continues to be retained at 1996-97 level of 20 per cent.

The progressive reduction in custom duty on tyres has led to a consistent increase in import and dumping of finished products, the association said.

Courtesy: Thehindubusinessline

The Statistics available now do not show the real picture for the year 2007-08 for want of import and month end balance stock of March 2008 figures. There are exports at price rate below market price. Why the tyre manufacturers are not against the low priced export? Maximum import are under 0% duty which is calculated on percentage of the export of finished products. All these games are against farmers. India is self sufficient in Rubber production according to consumption. Unwanted export and import are for an economic loss to both State and central Govts. The sale of rubber by growers for the year 2006-07 was 821290 Tonnes and purchase by manufacturers was 751096 Tonnes. Import up to December 2007 was 69852 Tonnes. The under mentioned data is as per your own figures.

The Domestic price of rubber was far below than International and now approximately equal to began Import to increase surplus stock in India.