India’s tyre industry demands import duty waiver for natural rubber as domestic output falls

The Indian tyre industry has raised its pitch for duty waiver on natural rubber imports as domestic supply has fallen extremely short of demand during the current season.

The production-consumption gap of natural rubber has widened to 58 per cent of consumption in the first quarter (Q1) of the current financial year, against 46 per cent last year, says Automotive Tyre Manufacturers Association (ATMA) in a press release statement.

“We will strongly reiterate our demand for import of natural rubber on a tariff rate quota (TRQ) basis at ‘nil’ rate of duty to the extent of gap between domestic production and consumption. This is important since expensive imports are striking at the root of cost-saving measures being adopted by the industry to stay competitive internationally,” said Rajiv Budhraja, director general, ATMA.

According to the latest figures released by Rubber Board of India, production contracted by 12 per cent while consumption went up by 14 per cent in Q1, leading to the widening of gap. The production-consumption gap stood at 1.76 lakh tonnes in the first three months of current fiscal against 1.21 lakh tonnes in the corresponding period last fiscal.

For the second consecutive month in June’18, natural rubber consumption exceeded one lakh tonnes. The production has remained below 45,000 tonnes in each of the first three months, according to the Rubber Board data.

As domestic price of natural rubber fell on weak buying from tyre firms, rubber farmers had been abstaining from tapping operations in their plantations, causing fall in natural rubber production.

Consistent fall in the domestic availability of NR and its erratic supply is hurting the production process at tyre companies at a time when a large capacity is going on-stream, according to an ATMA release.

However, customs duty on natural rubber import is 25 per cent, despite acute domestic crunch. According to ATMA, the tyre industry needs to adhere to pre import condition for natural rubber import against (tyre) export obligation.

ATMA is also worried that export obligation period for tyres has been reduced from 18 months to six months.

Shekhar Ghosh is a communications consultant and and former journalist, who has edited and written for publications such as like Business India, Business Standard, Business Today and Outlook.

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