32% jump seen in import of non-tyre products

Unable to cope with competition from China and Vietnam, Indian manufacturers are turning into distributors

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Across several rubber products category, imports have gone up substantially during last couple of years. According to Chemical and Allied Export Promotion Council (Capexil) data, import of latex, dipped & medical rubber products including contraceptives has gone up from $48.77 million in 2011-12 to $64.18 million in 2014-15, recording a whopping 32 per cent jump.

The inverted duty structure and the various trade agreements between India and South East Asian countries are the main villain in the game as import is much cheaper than making in India. The increase in cost of production, low availability of raw materials like natural rubber and advent of imported goods in the market got the local manufacturers in doldrums as they are not pitched on the same level with producers of China. Lately, other countries like Vietnam emerged as tough competitors to China. So a large chunk of Indian manufacturers are now turning out to be distributors of products from China and other countries. According to Mohinder Gupta, president, All India Rubber Industries Association (AIRIA) this is obvious in the case of balloons as 80 per cent of the balloon manufacturing units were vanished from the scene. They now distribute balloons imported from China. Speaking to Business Standard he said that the import duty of latex, the main raw material in making balloons, is 70 per cent, while the import duty of balloon is 10 per cent.

Dahanu in Maharashtra, which was once a hub for rubber balloons, wears a deserted look leading to thousands of job losses in the manufacturing sector. Same is the case with rubber rice rollers. The government, instead of promoting domestic manufacturing of rubber de-husking rollers, has signed FTAs to import rubber rollers at zero rate of duty.

Overall, the import duty cost comes to the tune of 7-10 per cent only across various products, including automotive tyres. The major raw materials for rubber-based goods like latex attracts 70 per cent duty and natural rubber attracts 25 per cent. Other raw materials have a duty of 10 per cent on an average. The local prices of these items are much higher compared to other countries. Hence companies, especially in the MSME sector, cannot survive under the present duty structure and market conditions in India. Gupta said that more than 30 per cent of 5,500 plus MSME units had either shut down or opted for the distribution route.

Rubber production falls

Meanwhile, natural rubber production during April-September period has dropped 15.4 per cent as per the latest data of Rubber Board. Production dropped to 281,000 tonnes as against 332,000 tonnes in the same period of last financial year.

Although consumption has dropped 2 per cent, the volume of consumption was almost double that of the local production. Total consumption was 501,535 tonnes as against 511,565 tonnes in the same period of previous financial year.

This is possible just because of the huge arrival through imports. During April-September period total imports were 213,184 tonnes. This was 236,640 tonnes in the same period of 2014-15, according to the data. India is having a total stock of 225,000 tonnes as against 200,000 tonnes at the end of September 2014.