Over 6,000 small and medium rubber units (SMEs) scattered in different clusters across the country expect a correction in inverted duty structure in the upcoming Union Budget.
India levies amongst the highest duties on import of raw materials and one of the lowest duties on import of finished rubber goods. Given the Government’s emphasis on domestic manufacturing, it is critical that the inverted duty is corrected. “
Mohinder Gupta, President All India Rubber Industries Association (AIRIA) said that many small rubber goods manufacturers have turned to trading of rubber goods as small manufacturers can’t compete with cheaper goods imported from China and other countries leading to loss to exchequer and also loss of employment.
According to AIRIA, the finished products can be easily imported as the import duty on rubber products is between 0 to 10 per cent, while the duty on raw materials for rubber industry is between 5 % to 70 %.
A survey by AIRIA last year showed that from 2,450 rubber products manufacturing units supposed to be existing, 990 units of the units had closed down in Punjab, Maharashtra, Kerala and Tamil Nadu during the last five years as they couldn’t face the onslaught of cheap imports of rubber goods.
AIRIA, quoting Capexil data, pointed out that the import duty on raw materials is highest in India when compared to other rubber product manufacturing countries. On the other hand, the import duty on finished rubber goods is lowest in India facilitating import of cheap goods to India.
There is a lot of potential for growth of rubber manufacturing industry in India as the consumption of rubber in India is amongst the lowest in the world. Developing a robust domestic rubber sector will help meet new Government’s objective for Make-in-India by aiding the SME manufacturing sector, AIRIA said.