Budget reaction: Punjab rubber sector not fully happy

Since Rubber industry has domestic capacity, the industry seeks increasing duty on import of finished rubber products

The rubber industry in Punjab welcomed the Budget proposals but said inverted duty structure in the sector has not been corrected, which is a cause for concern for the industry.

In Punjab alone, there are over 300 units functional, Jalandhar being the nucleus. Mohinder Gupta, managing director of Vinko Auto Industries, said, “The rubber industry is happy to see the finance minister has taken a special note of the micro and small and medium enterprise (MSME) sector in the Budget. Formation of the Micro Units Development Refinance Agency (Mudra) Bank is a positive step for the rubber sector, which has a large number of units in micro and small scale bracket. Also, the step towards the electronic Trade Receivable Discounting System (TReDS) for improving liquidity in the MSME sector will boost the rubber sector. Another reassuring feature is continued focus on skill development.”

“However, we are concerned inverted duty structure in the rubber sector has not been corrected. Inverted duty structure has led to large-scale import of cheap and qualitatively inferior rubber products. Indian industry has adequate capacity and expertise to manufacture quality products but is getting a beating due to low price realisation in the face of cheap imported products, he said.

According to the industry, currently finished products can be easily imported as the import duty on rubber products is between zero and 10 per cent, while the duty on raw material for rubber industry is between five per cent and 70 per cent. Moreover, some finished products can be imported even at less than 10 per cent tax due to various trade pacts that India has with different countries.

“As a result, many small rubber goods manufacturers have turned to trading of rubber goods as small manufacturers can’t compete with cheaper goods imported from China and other countries leading to loss to exchequer and also loss of employment,” said another manufacturer. Since Rubber industry has domestic capacity and capabilities to fulfill the domestic needs, the industry seeks increasing duty on import of finished rubber products.

Natural Rubber is the key raw material which is in short supply in India and imports are a must. “We are sure, the government will consider our submission for correction in inverted duty in the National Rubber Policy under formulation,” Gupta said.