The Centre’s decision last week to hike import duty on rubber from 20 to 25 per cent has evoked mixed response among various stakeholders. The United Planters' Association of Southern India (Upasi) has welcomed the move but consuming industries such as the tyre and rubber sector have opposed it.

N Dharmaraj, Vice President, UPASI said that the decision would serve to inject some life into the dying rubber plantation business, as the superior RSS-4 grade is a backyard produce and is crucial to the sustainability of the rural economy in Kerala.

Although a record quantity of 4.2 lakh tonnes of rubber was imported last fiscal, much higher than the production-consumption gap of 3.4 lakh tonnes, he said the increase in import duty would help shore up domestic rubber prices at least in the medium term.

Seeks clarification Upasi also sought to clarify certain issues on reports of the Rubber Board revising statistics on production. The planters’ body, according to Dharmaraj, will strongly oppose any move to revise lower production data retrospectively, since the lower production is a clear fall-out of the low price scenario.

However, the consuming industries have termed the import duty hike as “business unfriendly and a dampener on future investments” in the rubber and tyre sectors.

According to them, this would lead to worsening of inverted duty structure since tyres and other finished rubber goods can be imported at 10 per cent or even a lower rate of duty.

Ínverted duty structure

Raghupati Singhania, Chairman, Automotive Tyre Manufacturers Association (ATMA), said that the tyre industry has been bearing the brunt of inverted duty structure for a long time. While import duty on rubber is 20 per cent, tyres as finished products could be imported at as low as 5 per cent duty under various trade agreements.

Increasing the import duty will worsen the inverted duty scenario, increasing the threat of large scale dumping of tyres in India, he said.

The MSME rubber sector comprising more than 5,000 units also raised its objections, saying the duty on import of rubber in India is already amongst the highest compared to other countries.

Mohinder Gupta, President, All-India Rubber Industries Association, said that the small scale sector is finding it difficult to retain competitiveness against invasion of cheap import of rubber goods.

“Increase in duties on rubber will add to the cost of production making it for MSME’s to compete both in domestic and international markets besides impacting exports,” he said.

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