Rubber Industry Protests Import Duty Hike on Natural Rubber

Ludhiana, May 13, 2015: Rubber industries in the country have strongly protested the increase in import duty on natural rubber to 25 % which according to them will adversely affect the industry. According to All India Rubber Industries Association (AIRIA), the august body of natural rubber in India, import duty on the principal raw material has been increased to 25% while finished rubber goods can be imported at 10% and even zero rate of duty. The move to increase import duty on natural rubber as raw material runs contrary to Make-in-India campaign of the Government.

There are over 5500 rubber units in the country especially in the Micro, Small & Medium (MSME) sector. Punjab is a leading hub of rubber units in the country.

“The news of increase in import duty on natural rubber has come as a rude shock to the rubber industry in India. The duty on import of natural rubber in India is already amongst the highest in the world. Small scale sector is finding it difficult to retain competitiveness against invasion of cheap import of rubber goods. Increase in duties on natural rubber will add to the cost of production in India making it tougher for MSMEs to compete both in domestic and international markets. Rubber products exports will be severely impacted”, said Mohinder Gupta, President All India Rubber Industries Association (AIRIA) and Managing Director of Vinko Auto Industries Limited.

“India is grossly deficient in production of natural rubber. Domestic production and consumption gap has reached a level of 3.6 lakh tonnes and there is no alternative but to import rubber. In all fairness, Govt needed to wait for the National Rubber Policy which is being finalised before taking any decision on increasing import duties, added Gupta.

Already many small rubber products manufacturers have closed down across the country in the face of competition from cheaply imported goods. Many small rubber goods manufacturers have turned to trading of rubber goods as they can’t compete with cheaper goods imported from China and other countries. This has led to shutting down of plants and job losses in units such as those manufacturing moulded rubber goods, rubber compounds, rubber rice rollers and balloons etc.

Earlier this year, the government severely reduced the export obligation period to six months from 18 months wherever natural rubber is allowed as an input under Advance Authorisation scheme. Rubber MSMEs with their limited resources are finding it difficult to comply with the complexities associated with the reduction in exemption period. To add to the woes of rubber sector are the Purchase taxes (5%), heavy freight charges from Kerala, India to other States and from Sea Port to Dry Port and the cess of Rs 2 per kg of rubber besides the frequent poor quality of NR available in the country.

Safe Guard Duty on Carbon Black and Anti-Dumping Duty on Rubber Chemicals, another two important ingredients, are posing another challenge for the Rubber Industry.