THE Indian rubber industry group has sought lower import tariffs on raw materials such as butyl rubber and hi-tech synthetic rubbers, but duty for finished products will be kept high.
The All India Rubber Industries Association (AIRIA) in its pre-budget plea, seeks lower customs duty for natural rubber (NR) from the current 20% (Rs 20) per kg to 7.5 % (Rs 10) per kg, whichever is lower.
NR is the major raw material for Indian rubber industries, accounting for 35-45% of raw material cost.
At the current international price of Rs 160 /kg of NR, the import duty of Rs 20 works out to around 12.5%, much higher than the import duty on finished rubber products at 10%, resulting to an inverted duty structure.
Citing China, which has lowered the import duty of NR from 1,600 yuan to 1,200 yuan effective January, AIRIA said that the Indian industry has to keep at the prevailing duty rates in order to be competitive
At the current international price of around 25,000 yuan per tonne, the import duty comes to just about 5%, said the association.
Moreover, the high rate of import duty, ranging from 20-70% on most raw materials, the cost of finished goods made from such imported raw materials is higher than the landed cost of such imported finished goods, and thus leading to imports of finished goods –mostly cheap goods – from neighbouring countries, to the detriment of domestic producers, the group added.
The demand-supply gap in NR is estimated to be more than 150,000 tonnes in the next financial year.
Permission has been sought for duty-free import of 100,000 tonnes to bridge the-supply gap of NR, estimated to beat over 150, 000 tonnes in the next financial year. Likewise, AIRIA also asked that Import for NR under the ASEAN Trade Agreement (AFTA) be on reduced customs duty, in line with the concessional tariff on finished products. This is a pre-condition for providing a level-playing field for local rubber-based units. (RJA)
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