Commodities

Import curbs on rubber make tyre industry uncompetitive: ATMA

V Sajeev Kumar Kochi | Updated on June 08, 2020

Automotive Tyre Manufacturers Association (ATMA) has come out against import restrictions on natural rubber, saying it will turn the tyre industry uncompetitive.

Domestic rubber production is woefully deficient and unable to meet beyond 60 per cent of the demand, making imports imperative to run the tyre plants. Adding to the existing restrictive provisions on imports will adversely affect the tyre industry, which is already passing through an unprecedented crisis, ATMA said in a representation to the Rubber Board.

“Despite the fact that rubber imports are an absolute must in view of the paucity of domestic production, the imports are subjected to high import duties besides other restrictive provisions. Imports attract a 25 per cent import duty which is one of the highest in the world. On the other hand, tyres can be imported at 10-15 per cent duty (and much lesser duties under trade agreements) making it one of the longest-running cases of inverted duty structure,” said Rajiv Budhraja, Director General ATMA.

According to ATMA, rubber imports are a function of domestic availability. For instance, in FY20, imports declined by a significant 20 per cent since domestic production increased by 9 per cent. During the year, 4.6 lakh tonne of rubber was imported which compared favourably with domestic production-consumption gap of 4.1 lakh tonnes.

Refuting the claim that rubber imports have led to the suppression of domestic prices, ATMA said domestic prices have ruled 25 per cent higher than international prices at any given point of time. Rubber exports from India have come to a grinding halt in the last 2-3 years being out-priced in the international markets. And yet, in solidarity with the domestic growers, the entire domestic production has been picked up by the consuming industries, especially the tyre industry, it said.

In addition to the high import duty on rubber, the government has taken a series of restrictive measures in the last few years, under pressure from the NR producing interests.

According to ATMA, import of rubber to the extent of domestic deficit (quantity of rubber required by the consuming industry which cannot be met by domestic supplies) should be allowed duty-free since this will, in no way, cause any difference to domestic growers as the entire domestic stock is being picked up by the industry.

Published on June 08, 2020

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