Agri Business

Rubber industries seek lower import duty on latex

C J Punnathara Kochi | Updated on March 18, 2011 Published on March 18, 2011

Latex being collected in drum at a rubber farm in Kerala.(file photo)

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In the backdrop of the recent surge and wane in natural rubber prices, the All India Rubber Industries Association (AIRIA) has asked for the immediate correction in the inverted duty structure in rubber latex, on the lines of natural rubber that was effected recently. The import duty on latex stands at a significant 70 per cent, even as that on the finished product is less than 7.5 per cent, AIRIA said.

While growth in natural rubber production has been modest, huge capacity build up is being undertaken by the tyre industry, which could increase the demand for natural rubber in the immediate future. According to the Rubber Board, the cumulative production of natural rubber in the country grew by three per cent to 8,04,450 tonnes during April-February period. Consumption, meanwhile, grew by 1.9 per cent to 8,68,230 tonnes.

The growing demand and prices has prompted AIRIA to write to the Finance Ministry pointing out that the increase in price of latex is threatening the very survival of the industry which comprises mainly of small units. Latex is largely consumed in the country in the production of foam mattresses, medical and surgical articles including gloves, balloons, hot water bottles and some sports goods.

Latex prices

Along with the price of rubber sheet, latex prices have also surged from around Rs 55 a kg in January 2009 to Rs 117 at present , after having peaked to Rs 148. It is surprising that the import duty on latex has been gradually enhanced from 25 per cent in 1999-2000 to 70 per cent recently, while that on finished goods has been reduced from 40 per cent to less than 7.5 per cent during the same period, Mr Vinod Simon, President of AIRIA said.

Mr Simon added, “The facilitated import of finished goods is antithetical to the Government's avowed policy of enhancing domestic value addition.” A large number of the small and medium scale units are not able to pass the price hike to the consumers.

The Government has all along considered natural rubber and latex as co-existing products. Natural latex is the first stage output of the rubber tree and is processed to obtain natural rubber. While considering the reduction in customs duty on natural rubber to 7.5 per cent for a limited quantity till March 2011 and subsequently a cap of Rs 20 per kg, the Government should have considered a reduction in customs duty on rubber latex as well, AIRIA said. While natural rubber is attracting duty at Rs 20 a kg at current prices, latex is attracting customs duty of over Rs 100 a kg.

Meanwhile, the Rubber Board has said that rubber production for February has increased by 5.8 per cent to 54,500 tonnes, while consumption has decreased by 2.5 per cent to 79,000 tonnes.

Published on March 18, 2011
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