Inverted duty, FTAs adversely affecting rubber industry: AIRIA

Rubber industry, dominated by around 6,000 micro, small and medium sized manufacturing units, is facing a twin challenge of inverted duty structure and FTAs signed by India that led to rise in cheap import of finished rubber goods over the last few years, an industry expert said.
"Inverted duty structure has been a bane for rubber sector in India and has stifled the growth of this vital sector of manufacturing. Over the last few years, India's Trade Agreements with Asian countries have led to ballooning of trade deficit with these countries in non-tyre rubber products," All India Rubber Industries Association (AIRIA) President Niraj Thakkar said on the sidelines of National Rubber Conference here today.

Between FY'09' and FY'11', India signed three major trade agreements with Association of South-East Asian Nations (ASEAN), Korea and Japan, respectively.
Trade deficit in non-tyre rubber products with these three trading partners has gone up from Rs 651 crore in FY'09 to Rs 1,725 crore in FY 13', a growth of 165 per cent in four years, showed a study of Ministry of Commerce data.
According to AIRIA, the finished products can be easily imported as import duty on rubber products is between 0 to 10 per cent, while duty on raw materials for rubber industry is between 5 per cent to 70 per cent.

"Not only import duty on raw materials is higher, the duty is levied even on those raw materials which are not produced in the country. If the idea is domestic value addition, this anomaly needs to be corrected," Thakkar said.

A recent survey by the industry body showed that from 2,450 rubber products manufacturing units, supposed to be existing, 990 units, which 40 per cent, have closed down in states of Punjab, Maharashtra, Kerala and Tamil Nadu during last five years in view of cheap imports of rubber goods.
AIRIA has stated that the import duty on raw materials is highest in India as compared to neighbouring rubber product manufacturing countries. For instance, import duty on NR Latex is 70 per cent in India, while it is just 10 per cent in China.

Similarly, in case of Synthetic Rubbers such as SBR and PBR, import duty is 7.5 per cent in China as against 10 per cent in India. India is deficit in both natural rubber and synthetic rubbers.