Comm Min asks FinMin to reduce import duty on natural rubber

With a view to help domestic tyre manufacturers, the Commerce Ministry has sought the reduction of import duty on natural rubber.

In a communique to the Finance Ministry, the Commerce Ministry has suggested that import duty on natural rubber should be lowered to either Rs 20.46 per kg, or 20 per cent of the consignment, whichever is lower. 

"The objective is to harmonise the domestic and international prices," a Commerce Ministry official said.

As per the Rubber Board, prices of natural rubber, a key raw material for tyre manufacturing, are hovering at Rs 169 per kg in the domestic market, as against Rs 163 per kg in the global market.

At present, imports of raw rubber attract about 20 per cent duty, whereas the import duty on tyres is 10 per cent.

According to Automotive Tyre Manufacturers Association (ATMA) estimates, the industry imports about 1.5 lakh tonnes of natural rubber every year.

Imports of finished tyres for trucks and buses stands at about 1.25 lakh tonnes a month, while passenger car tyres account for 2.5 lakh tonnes a month.

Tyre manufacturers have been complaining about the high prices of rubber. They have hiked tyre prices by 10-15 per cent since January this year. After China, India is the second largest consumer of natural rubber.  

The increased area under cultivation and favourable weather conditions pushed up India's natural rubber production by 4.3 per cent in September to 77,500 tonnes, compared to the same month last year.

The country had produced 74,300 tonnes of rubber in September 2009.