AIRIA urges Centre to change imported duty structure for rubber goods

The All India Rubber Industries Association (AIRIA), an organisation comprising over 1,400 small and micro industries, has urged the Centre to increase the Customs duty on imports of finished rubber goods as it is lower than levy on natural rubber shipments into the country, said AIRIA President Shashi Singh. 

Currently, the import duty on natural rubber is 25 per cent or ₹30 a kg, whichever is higher. Latex, made from natural rubber, attracts a 70 per cent import duty. On the other hand, a 10 per cent Customs duty is imposed on import of finished goods, ending up in an inverted duty structure. 

“Our demand is that if the Centre cannot reduce the duty as it wants to protect the farmers, it is ok for us. But there should be some policy where this inverted duty structure can be controlled. People are directly importing products made from natural rubber or latex like gloves or other products. So our demand is that at least the import duty should be increased to discourage direct finished product import,” he told businessline in an online interaction.

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5 lakh tonnes NR deficit

India has enough capacity and capability to produce rubber goods. “This will help fulfil the Prime Minister’s vision of Atma Nirbharata,” said Singh, who assumed the role as AIRIA president last month.

AIRIA has about 3,000 members representing its members and it is focussing on how to get benefits for the micro, small and medium industries from the government. “What we are working on is strategic planning, promoting growth, addressing industry challenges, sustainable practice and, most importantly, technological advancement and global market competitiveness. “This is what my focus will be during my term,” he said.  

India produces less than 8.5 lakh tonnes of natural rubber (NR) while the demand is 13.5 lakh tonnes. “We have a deficit of about five lakh tonnes which is met through imports. Shipments into the country will increase as the demand is increasing,” said Singh.

Prices may rise

In view of the need to import natural rubber, the industrial commodity prices will likely increase in 2024. In the domestic market, the RSS4 (ribbed smoked sheet) is currently ruling at ₹163 a kg. Its equivalent, RSS3, is ruling at ₹171.99 a kg in Bangkok. 

On the other hand, many varieties of synthetic rubber such as EPDM, silicon and polychloroprene are not produced in the country. These are imported and they need to be given the benefit of Customs duty for manufacturers to be competitive in the global market, he said. 

But since the duty is 10 per cent on the finished products, many import the goods directly. “The inverted duty structure has to go in this too,” Singh said.

If the duty structure on the raw material side of synthetic rubber can be reduced, it will help the small and medium enterprises. On imports from Ivory Coast, the AIRIA President said since the country faced a demand-supply gap, the industry has to import from wherever raw material is available, though the non-tyre sector does not depend much on natural rubber.

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India Rubber Expo 2024

Recently, Reliance Industry has begun producing butyl with Russian technology and it is the only producer of butyl in the country. The AIRIA is actively supporting the government to increase natural rubber production, particularly in the North-East and two other non-traditional areas such as the Konkan region in Maharashtra. “We are also promoting rubberwood in our seminars by asking people to buy rubberwood furniture. This will help since good prices will enable farmers to cut the trees after 30 years and go in for replantation,” Singh said.

To a question, the AIRIA president said almost all types of rubber products are being manufactured in the country.  In particular, the industry did not face any competition from China as the Government has taken measures to curb Chinese imports, particularly toys and gloves. 

AIRIA will hold one of its biggest exhibitions — India Rubber Export — in Mumbai from March 20 to 22 this year. “We will have an international rubber conference where speakers from leading global and domestic companies have been invited. It is a technical one providing inputs to the rubber industries. Second, we will be holding a reverse buyers-sellers meet, where 190 international buyers who want to buy rubber products from India will take part,” Singh said. 

PLI scheme

AIRIA will also allow its members to meet these buyers on a one-to-one basis after taking prior appointment. An association team is working on the production-linked incentive scheme in particular to overcome the hurdles posed in the regulations. “Under the PLI scheme, a company will have to invest ₹100 crore to ₹200 crore in machinery or their turnover has to be over ₹200 crore. Small scale industries such as rubber goods manufacturers cannot make such investments. So, we are trying to propose to the government if it can consider making a cluster of manufacturers to promote rubber industries,” he said. 

AIRIA is also setting up a team to help its members implement the Bureau of Indian Standards norms smoothly, the AIRIA president said.

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