Muffed duty structure hits Indian rubber sector

CHENNAI – A skewed import duty structure that makes it cheaper to import finished products than raw materials has put the domestic rubber industry at a disadvantage, according to Vinod Simon, President of All India Rubber Industries Association (AIRIA).

The customs duty on input rubber is higher than on tyre and non-tyre rubber products, he said during the association’s 60th annual general meeting.

The fracas on tariffs are affecting the domestic manufacturers; Duty on rubber products is at 10% whilst natural rubber is at 20% with a cap of Rs 20 a kg and Latex at 70% with a cap of Rs 49 a kg.

Simon also said that natural rubber prices have also been volatile. Prices run at a high Rs 258 a kg in April 2011, dropped then escalated again. The fluctuation is affecting the small manufacturers, he said.

The rubber products sector is a Rs 50,000-crore industry with the tyre segment accounting for Rs 30,000 crore comprising large players, whilst the non-tyre segment is dominated by about 4,000 small-scale companies, along with 500 medium-sized firms and 60 large ones.

Natural rubber production has increased by about 5% to 9 tonnes in 2011-12 from 8.60 tonnes in the previous year. Imports also went up to 2.13 tonnes from 1.90tonnes in the previous year.

In 2011-12, exports of automobile tyres, tubes and rubber grew by 36% to Rs 11,129 crore from the previous year’s Rs 8,183 crore. (RJA)