LONDON: The Centre’s recent decision 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 it amidst opposition from consuming industries in the tyre and rubber sector.
- Dharmaraj, Vice President, UPASI said that the decision would definitely 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 has been imported last fiscal, substantially higher than the production/consumption gap of 3.4 lakh tonnes for the same period, he said the increase in import duty would help shore up domestic rubber prices at least medium term.
UPASI also sought to clarify certain issues on the reports of revising Rubber Board statistics on production. The planters’ body, according to Dharmaraj, will strongly oppose any move to retrofit the current year’s 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 sector.
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 and even lower rate of duty.
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 was 20 per cent, tyres as finished products could be imported at as low as 5 per cent duty under various trade agreements. He said increasing the import duty will worsen the inverted duty scenario, increasing the threat of large scale dumping of tyres in India.
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 pointed out that 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.
