Indian govt should help natural rubber growers get better prices: AIRIA chief

The Indian government should help natural rubber producers get better prices while cutting the import duty on the industrial raw material, besides allowing shipments into all ports in the country, All India Rubber Industries Association President Ramesh Kejriwal said. 

“We are facing a demand-supply deficit of at least five lakh tonnes (lt) annually. Natural rubber prices have dropped to below ₹150 kg from about ₹180 a year ago. The government should handhold the growers so that they will continue to take interest in the crop and not switch over to other crops. It should try to bring more area under rubber cultivation,” Kejriwal, told businessline in an interview over the telephone.

Inverted duty structure

His views come on the heels of the country’s natural rubber imports rising to a three-year high of 5.46 lt despite production increasing to a five-year high of 7.75 lt. This was because demand for the industrial commodity increased to a record 12.38, data from the Rubber Board show.

On the import duty for natural rubber and latex, he said it was 25 per cent currently, whereas the duty for finished goods was less, not exceeding 10 per cent depending on the product. “It is not good to have such an inverted duty structure which will affect the domestic industry in which most are small and medium units,” he said.

The duty structure affects AIRIA members, all of them small and medium entrepreneurs, more than bigger tyre manufacturers. “The tyre industry consumes 70 per cent of the total rubber available in the country. Tyre makers import various grades in bulk and thus the duty structure is not a problem for them,” the AIRIA president said. 

Port curbs raising costs

With tyre companies importing more than purchasing from the domestic market, the Centre needs to handhold growers and try to set a benchmark price that will encourage them to produce more.

 “But for purchases from small industries, growers would have shifted to other crops long ago. They cannot wait for prices to rise again because nearly 90 per cent of them are small growers and cannot afford to sustain the losses,” Kejriwal said. 

The other problem with rubber imports is that they are currently permitted only through Chennai and Mumbai ports. “Rubber is consumed across the country.  There is Kolkata and other such ports. A unit in Kolkata will have to bring the raw material from one of these ports by road, incurring additional costs,” he said. 

The additional costs affect the profitability of small rubber units and hence, the Centre should consider allowing imports through other ports too, he said, adding that nowadays imports are coming in various forms and origins, including from African nations such as Ivory Coast. 

Helping N-E growers

The AIRIA president said efforts should be made to improve the quality of natural and synthetic rubber produced in the country. “The current quality is not up to the level of imported rubber and it has to be standardised,” he said. 

On AIRIA supporting the Rubber Board’s initiative of expanding the area in the North-East, Kejriwal said some of its members are in talks with these producers and are buying the commodity. 

“For these members, the North-East is nearer and hence transportation is cheaper. We are also making efforts to make the growers bring their produce to Kolkata, where many rubber units function,” he said. 

On the industry not being satisfied with the production, demand and import data from the Rubber Board, Kejriwal said it will have to be more transparent and the “communication gap” will have to be closed. 

Export more products

Pointing out that small entrepreneurs are manufacturing rubber products, he said the government should handhold them by coming out with a policy for rubber goods like the one it announced for the textile industry. 

“We have to export more rubber products to Europe and other countries. We also need to develop infrastructure to promote exports and take on China in the global market,” the AIRIA president said.

Currently, customers in regions such as Europe do not want Chinese products. “So, this is the right time to promote our rubber products exports as they have tremendous potential. We are tying up with organisations such as FIEO,” Kejriwal said. 

On the products that could be imported, he said items such as conveyor belts, rubber matting for electrical purposes, rubber sheeting, especially for medical equipment, products made from latex for medical purposes and silicon rubber etc could be considered. 

The AIRIA president urged the Centre to reduce the GST for rubber products, particularly footwear, as they were mass items. “Footwear is worn by all sections of the population. Raw materials for rubber products attract 18 per cent GST but when we sell, only 5 per cent gets adjusted,” he said. 

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