Tyre cos seek import duty cut on Chinese lines

Written by M Sarita Varma | Thiruvananthapuram | Updated: Jul 17 2010, 04:25am hrs
Just days before a commerce ministry's committee on natural rubber submits its report, the tyre makers have made a last ditch effort to get import tariff reduced. The committee, chaired by Rubber Board chairman Sajen Peter, is expected to submit its report by Monday.

Quoting the Chinese government, the tyre makers said China has lowered the import duty drastically and it currently stands at just 6.8%, because of which Chinese tyre makers are able to access natural rubber at much low prices which also helps in reducing their production costs.

This (lowering the import-tariff) would positively affect the industry's competitiveness, said Rajiv Budhraja, director general, ATMA (Automotive Tyre Manufacturers' Association). Three industrial outfitsATMA, All India Rubber Industries Association (AIRIA) and Indian Cycle and Rickshaw Tyre Manufacturers (ICRTMA)had jointly approached Delhi High Court, complaining that the import tariff in natural rubber in India was a high 20%.

The Delhi High Court had directed the ministry of commerce and Rubber Board to consider carefully the representations made by different sections of rubber industry. The committee chaired by Rubber Board chairman, had been hearing the pleas from various stakeholders as part of the same consultation.

Growers, meanwhile, are quick to cite the vulnerability of the small farmer, who constitute 90% of rubber farmers, against any move to lower import duties.

If import walls are lowered, the rare price picnic of small farmers will be spoiled. If one looks at the years before the current bullish phase, farmer has seen natural rubber price plunging much below Rs 35 per kilo, says Siby Monipilly, general secretary, Indian Rubber Growers Association. India's natural rubber planters and tyre makers have been on a collision course ever since rubber prices reached record highs on demand-supply gap. Doubts have even been cast on the country's official statistics on buffer stocks.

A study by Bangalore-based Indian Institute of Plantation Management had ratified the Rubber Board's stock data. But recently a report by the Association of Natural Rubber Producing Countries (ANRPC)a global body of major rubber producing countrieshad cautioned about a speculation bubble floating around in the Kottayam market.

Meanwhile, in its monthly Rubber Statistical Bulletin, the Board has attributed the current rise in rubber prices to growth of tyre industry and also to low rubber output and increase in global prices.