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India: Rubber producers welcome increase in import duty on natural rubber to 25% (06-05-2015)

 

India: Rubber producers welcome increase in import duty on natural rubber to 25%  

KOCHI: As expected, there has been a mixed reaction to the increase in the import duty on natural rubber to 25 per cent from 20 per cent by the Union government.

The rubber user industry has protested against the decision while producers have welcomed it.

The rubber and tyre industries fear they will be badly hit. Finished rubber goods can be imported at 10 per cent while the raw material can be brought in only at 25 per cent. They have termed the decision as unfriendly and a dampener on future investments.

“Raising the import duty on natural rubber will worsen the inverted duty structure, increasing the threat of large-scale dumping of tyres in India,” said Raghupati Singhania, chairman of the Automotive Tyre Manufacturers Association (ATMA).

The non-tyre rubber goods manufacturing industry consisting of 5,500 units employing more than 2 million people also feels the import duty hike will have a negative impact. “Already, many manufacturers have closed down the units in the face of competition from cheaply imported rubber goods,” said Mohinder Gupta, president of the AllIndia Rubber Industries Association (AIRIA). “Many are shunning manufacturing in favour of trading of rubber goods imported from China and other countries.”

They have called for rolling back the import duty hike and supporting growers directly with subsidies. Hailing the move, producers said that the decision will serve to inject much-needed life into the rubber plantation business.

“Although a record quantity of 4.2 lakh tonnes of rubber have been imported last fiscal, substantially higher than the production-consumption gap of 3.4 lakh tonnes, the increase in import duty will help shore up domestic rubber prices at least on medium term,” said N Dharmaraj, vice president of the United Planters` Association of Southern India (Upasi).

With the duty hike, the landed price of TSR grade rubber will beRs 115 per kg against Rs 106 per kg for the local material. The landed price of RSS-4 rubber will now be Rs 141 per kg against the domestic traded price of Rs 119, Dharmaraj said.

According to him, the government should bring in policy guidelines not only on restricting imports to the tune of the production-consumption gap but also lay down the proportion of grades to be imported in line with the proportion of production of these grades domestically.

– India Times

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