Centre urged to slash import duty on rubber

The Union government is seriously considering to slash import duty on natural rubber following the demand from rubber-based industries.

Automotive Tyre Manufacturers Association (ATMA), Chemical & Allied Product Export Promotion Council (CAPEXIL) and All India Rubber Industries Association has already sought the commerce ministry's intervention and has demanded a reduction in the duty in the next budget.

In line with the inverted duty structure of the government, the import duty of raw material should be below the duty of finished products, but natural rubber is exempted from this general policy. The duty for rubber-based finished products including tyre, is 12.5 per cent, while the duty on natural rubber is 20 per cent.

Hence the rubber-based indu stry is strongly pressing for import duty cut. However, it is learnt that the Rubber Board is against the duty cut and has already submitted its views to the ministry of commerce.

The board argues that the import duty should not be reduced under any circumstance as it will result in the industry controlling the prices in the domestic market.

The industry is presently allowed duty free import under advance license scheme and more than 80,000 tonne can be chanellised through this route.

But the actual import through this route is less than 50 per cent of the permissible level for the last few years. Hence growers opine that the industry should import the permissible quantity through the advance license scheme before demanding reduction in the import duty.

Board also says that in India, the supply and demand is almost on par and in recent years consumption is slightly higher (less than 1 per cent) than production.

So there is no serious dearth for the product in the domestic market. Throughout the last year, the price in domestic market was below the global prices and the difference was Rs 10 per Kg on an average.

This is one of the main reasons for the non-utilisation of advance license scheme fully. Hence the Rubber Board has strongly favoured the continuation of present duty structure in the case of natural rubber.

Meanwhile, in the domestic market, the price of bench mark grade RSS-4 has crossed Rs 90 a Kg today after a gap of six weeks. Incessant rainfall in Kerala, especially in the southern districts, has caused a temporary halt in production.