Tyre industry hit as Q1 output of natural rubber falls to 6-year low

Industry body Atma wants nil rate of duty on imports to the extent of the gap between domestic production and consumption

The country's output of natural rubber (NR) in this financial year's first quarter stood at a six-year low of 126,000 tonnes, while consumption was 302,000 tonnes.    

The output stood at 42 per cent of consumption, compared to 54 per cent a year before for the same period. Data from the Rubber Board of India show production contracted by 12 per cent, while consumption rose 14 per cent. Despite domestic prices being more than those abroad, the output was below 45,000 tonnes in each of the three months under review. Consumption crossed 100,000 tonnes in both May and June.  

"This grossly inadequate availability is leading the tyre industry to a precarious position. The dependence on expensive imports will need to go up significantly if tyre manufacturing operations are to be sustained," said Rajiv Budhraja, the director-general of the Automotive Tyre Manufacturers Association (Atma).  

Out of the inputs that go into making a tyre, a little over 40 per cent by weight is rubber. Atma complains that domestic supply of rubber is not only inadequate but also erratic. Another of Atma's complaints is that at 25 per cent, the customs duty on NR imports is higher than in other countries that import the raw material. Also, for importing NR, the tyre manufacturer has to report its prior export obligations to the authorities.   

"We strongly reiterate our demand for import of NR at a nil rate of duty to the extent of the gap between domestic production and consumption. Expensive import is striking at the root of cost-saving measures being adopted by the industry to stay competitive internationally," complained Budhraja.