Micro, Small and Medium Enterprises in India’s rubber industry are calling for an increase in import duty on manufactured rubber goods entering the country. They are asking for import duties to be increased to 30% from the current maximum of 10%, following an alleged substantial hike in import and dumping of finished goods in India.
According to All India Rubber Industries Association (AIRIA), overall import of rubber products in India has gone up 120%from Rs41.8billion to Rs92.02 billion in four years to 2015-16.
AIRIA president, Kamal K. Chowdhury, said that India has one of the highest import duties on raw materials and one of the lowest import duties on finished rubber goods. Chowdhury added that this inverted import duty structure is leading to a surge in import of finished goods.
“Of the total import of finished goods, as much as 80-90% is avoidable as domestic rubber manufacturing units have capabilities to meet the demand but low import duties on rubber products especially under FTAs has led to indiscriminate imports in the country,”he said.
According to AIRIA, the finished products can be easily imported as the import duty on rubber products is between 0 and10%, while the duty on raw materials for rubber industry is between 5% and 70%. Not only import duty on raw materials is higher, the duty is levied even on those raw materials which are not produced in the country thereby increasing the cost of production in India.
Finished products made from natural rubber are imported without duty from Asian countries like China and Sri Lanka whereas natural rubber is imported at 25% or Rs.30 per kg whichever is lower. Balloons, gloves & dipped products made from latex rubber are imported at 8% duty from Asian countries like China and Sri Lanka, whereas latex rubber is imported at 70%, AIRIA has stated.
Import duty on manufactured rubber products is lowest in India as compared to other rubber consuming nations.
For instance, the import duty in China on tubes, pipes and hoses is 10%and above, while these can be imported at 6% in India. Rubber rice de-husking rolls, widely used in rice mills across the country, can be imported duty-free in India while China employs up to 80% duty on the same.