Domestic production of natural rubber way below existing demand: Tyremakers

Tyre industry consumes around 65-70% of the overall natural rubber produced in India

Tyre makers have expressed concerns over the availablity of natural rubber (NR) in India, as domestic production levels continue to be less than the existing demand for the raw material in the country.

The Rubber Board had projected NR production to stand at 8 lakh tonnes in 2017-18, marking a growth of 16 per cent over last year’s production level of 6.9 lakh tonnes. However, in the first half of 2017-18, production is at a level of 3.2 lakh tonnes, indicating a mere 5 per cent growth over last year’s standings.

In order to achieve the 8 lakh-tonne target set by the board, production needs to grow at a rate of 24 per cent year-on-year in the second half of 2017-18- chances of which are bleak, according to the Automotive Tyre Manufacturers Association (ATMA). 
 

Currently, the tyre industry consumes around 65-70 per cent of the overall natural rubber produced in the country.

According to the Rubber Board’s recent data on NR production, production levels in the first half of the current financial year have stoked the concern of tyre producers in the country who are now hoping for a resurgence to help them sail through the existing gloom impacting their industry.
 

The Rubber Board has projected a resurgence in NR production- an uptrend the tyre industry is looking forward to. 

“The grim situation on the NR front continues. Domestic production continues to be far below the domestic demand. The gap between domestic NR production and consumption is not showing any signs of bridging. Last year, domestic deficit was 40 per cent. Deficit continues to be at the same level in the first half of the current financial year,” said Satish Sharma, Chairman Automotive Tyre Manufacturers Association (ATMA).

The domestic tyre industry is facing an acute NR scarcity, notwithstanding the ongoing peak season in the country. There is an availability crunch, despite the fact that domestic NR has been fetching higher prices than global price levels. There is a serious threat of disruptions in tyre manufacturing, added Sharma.

Tyre makers say there is no other way but to import NR to bridge the existing gap in supply, even though the high import duties have been hurting the industry gravely. Import of NR attracts 25 per cent duty, which is the highest in the world, and it adds to the costs incurred by the industry.

According to ATMA, the existing NR scenario calls for a correction in the ‘inverted duty’ mechanism,  as effective customs duty on tyres ranges from 0-8.6 per cent vis-à-vis basic duty on natural rubber in India.

The industry has called for the import of NR on a tariff rate quota (TRQ) basis. Players have also requested zero-duty provision for imports. The twin measure is expected to reduce the gap between domestic production and consumption. Industry players have also asked authorities to remove port restrictions on natural rubber, which is currently permitted to be imported at two ports- Chennai and JNPT. The restriction, they say, is only adding to the overall cost incurred by tyre makers, besides leading to further delay.

The implementation of these long-pending measures would enable the domestic tyre Industry to retain its competitive edge, said Sharma.