User industries demand duty-free rubber imports

Traders and user-industries of natural rubber say there is a strong case for allowing its duty-free import, given the steep rise in demand from tyre companies.

The Rubber Board, they complain, is yet to acknowledge that its earlier projections on consumption and stocks have been overtaken by market reality.

The Board had estimated an excess of consumption over production of 85,000 tonnes by the end of 2010-11, assuming a growth rate of nine per cent in production and six per cent in consumption.

However, contend user-industries, especially in the small and medium sector, consumption in the April-June quarter rose by 5.2 per cent to 230,000 tonnes, while production went up only 4.1 per cent, to 166,000 tonnes. The trend, they say, points to a shortfall by year-end of at least double the Board’s estimate, with a likely double-digit growth in consumption, led by the automobile tyre industry.

Rajiv Budhraja, director-general of the Automotive Tyre Manufacturers Association (Atma), estimates total consumption of rubber in India over the year would exceed production by 176,000 tonnes. Unlike the Board’s estimate of a six per cent rise in consumption, Atma, he told Business Standard, expects one of 12/15 per cent. The Board’s demand projections were very conservative, while production figures were optimistic, he said; it would probably happen the reverse way.

N Radhakrishnan, former president of the Cochin Rubber Merchants Association, said average monthly consumption rubber was likely to be 80,000 tonnes this year, leading to 960,000 tonnes of annual consumption, compared to production of about 850,000 tonnes.

One outcome, say user-industries, has been a sharp rise in rubber prices in the local markets. Imports aren’t filling the gap adequately: that in June, for instance, was 9,255 tonnes as against 20,258 tonnes during the same month last year.

While a steep rise in demand and prices for natural rubber would benefit the million-odd growers, there are also five million workers in the 5,000-odd rubber based user-industries in the country. The case for allowing duty-free imports, for at least a while, is strong, contend the critics.

A related demand is for the Rubber Board to improve the way it estimates demand and stocks. The Board says the stock as of end-June in the country was 216,554 tonnes, as against 186,435 tonnes at the same time last year.