Commodities

Growers, traders oppose tyre industry demand to import natural rubber

Sajeev Kumar | | | Updated on: Nov 30, 2021
image caption

Huge shipments into the country have affected the prices in the last 8 years: UPASI

The tyre industry’s demand to allow duty-free imports of natural rubber to reportedly meet a deficit of 4.4 lakh tonne this fiscal has become a controversy with growers and traders opposing the proposal.

Growers point out that the tyre manufacturers had imported only 48,800 tonnes of sheet rubber of the 5,22,260 tonnes consumed last fiscal. As per Rubber Board data, the year ended with a carryover stock of 61,000 tonnes of tradeable sheet rubber with growers, and 93,000 tonnes of tradeable sheet and block rubber with traders and processors.

Thus, the statistics reveal that it was not necessary to import sheet rubber at all. Besides, the industry imported 3,54,070 tonnes of block rubber last year against their requirement.

Drop in price

Santhosh Kumar, Chairman, UPASI Rubber Committee, told BusinessLine that the natural rubber (NR) imports have led to a drop in price and it is evident that the volume of imports has a direct correlation to prices. Huge imports over the past eight years have depressed NR prices that have resulted in cultivation being affected, besides growers’ livelihood.

“Whenever sheet rubber prices in India go up, the industry always demands duty-free imports. As the industry cannot run at loss, how can growers survive at low prices of the commodity,” said N Radhakrishnan, Advisor, Cochin Rubber Merchants Association.

“The logic of increased costs of tyres does not hold good as natural rubber only occupies a small percentage of materials used in the tyre. The price increase has been much more in other components of the tyre manufacturers such as steel cord, textile, synthetic rubber, fuel costs, etc. Moreover, the increase in prices of the raw materials in tyres is being passed on to the consumer,” the UPASI Chairman said.

Quoting the Standard Input Output Norm (SION), Kumar said it defines the number of inputs required to manufacture a unit of output for export purposes. Fixation of SION facilitates the issuing of advance licences to the exporters. The consuming industry continues to import based on outdated norms. The SION norms for import for tyres specify 44 per cent of NR per tyre, while the actual requirement currently is only 18-20 per cent as per the industry estimate.

According to MP Cherian, UPASI President, there should not be any tinkering with import duty on natural rubber in response to the demand made by the tyre sector. It appears that imports were resorted to as an instrument to suppress prices. NR growers will take a long time to recover from the fall in prices over the lasteight years and the consuming Industry demand, if accepted, would only aid in aggravating the misery of growers.

With the easing of weather, Santosh Kumar said full-scale tapping will take place and more rubber will be available in the market. The consuming industry will have to support the growers at this juncture than clamour for imports.

The tyre industry always raises a hue and cry when sheet rubber prices go up. The industry has assured the government that the local prices will not go down due to imports. “Will they assure the government to buy RSS-IV locally at ₹200 per kg during this financial year,” Radhakrishnan wondered.

The Rubber Board should certify the shortage in availability each month and recommend the quantity to be imported so that excess imports can be avoided, he said.

Published on December 01, 2021

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