The Rubber Board has welcomed the budget proposal over increasing the basic customs duty rate on compound rubber from 10 per cent to 25 per cent or ₹30/kg, whichever is lower, at par with natural rubber other than latex., saying it will help domestic growers get higher prices.
The duty hike is to curb circumvention of duty, she said tabling the budget in Parliament.
However, the United Planters Association of Southern India (UPASI), a key stakeholder, has opposed this saying it will apply only to countries given the most-favoured-nation (MFN). It will not apply to countries with which India has free trade agreements.
K.N. Raghavan, Executive Director, Rubber Board, told businessline that compound rubber will attract the same rate of customs duty as natural rubber. It will stop imports of natural rubber in the guise of compounded rubber. Further, it will lead to more mixing for making compound rubber being done within India.
UPASI said under Indo-ASEAN free trade agreement, India had conceded preferential tariff at zero per cent for compound rubber. The imports of compound rubber from ASEAN countries such as Thailand, Malaysia, Indonesia and Malaysia are at zero duty.
Not applies to ASEAN
It appears that the proposal will not apply to the ASEAN countries. This means that ASEAN countries could continue to export compound rubber duty-free, while countries such as the US, Germany, South Korea, will have to pay higher duty as announced in the Union Budget 2023-24, R Sanjith, secretary, Upasi said.
UPASI thanked the government and Rubber Board for taking steps to increase the import duty from 10 per cent to 25 per cent. This was necessary since the import of compound rubber has shown an increase from 11,070 tonnes in 2008-09 to 1.146 tonnes in 2021-22, recording an annual increase of 21.73 per cent.
UPASI’s analysis indicates that 60 per cent import of compound rubber is in the form of compound rubber with carbon black and silica. Out of 1.14 lakh tonnes of compound rubber imported, 0.69 lakh tonnes were compound rubber with carbon black or silica.
The origin-wise import of compound rubber with carbon black or silica suggests that ASEAN countries alone account for nearly 88 per cent of the imports. This implies there would not be any significant changes due to the increase in the import duty for MFN.
Upasi requested that import duty concession for compound rubber given under ASEAN agreement should be withdrawn and Rubber Board should be authorised to issue No objection Certificate on every import consignment.
Satish Sharma, chairman, ATMA, said the enhancement of duty on compound rubber has come as a matter of concern for the industry. India is deficient in rubber production, both natural and synthetic. In fact, NR in India attracts the highest rate of duty of 25 per cent despite the fact that there is a wide gap between demand and availability and imports are inevitable.
The increase in duty will lead to increase in cost of production and affect price competitiveness. In the interest of Make in India, the increase in duty on a key raw material that iis deficient needs reconsideration.