Natural rubber production contracted 12% while consumption went up 14% in Q1, leading to widening of the supply-demand gap, according to the latest figures released by Rubber Board of India.
Tyre industry has raised its pitch for duty waiver on NR (natural rubber) imports as domestic supply fell short of demand in unprecedented terms in the current season. The production-consumption gap of NR has widened to 58% of consumption in the first quarter (Q1) of the current financial year, against 46% in the year-ago period, says Automotive Tyre Manufacturers Association (ATMA).
“We will strongly reiterate our demand for import of NR on a tariff rate quota (TRQ) basis at ‘nil’ rate of duty to the extent of gap between domestic production and consumption. This is important since expensive imports are striking at the root of cost-saving measures being adopted by the industry to stay competitive internationally,” says Rajiv Budhraja, director general, ATMA.
According to the latest figures released by Rubber Board of India, NR production contracted 12% while consumption went up 14% in Q1, leading to widening of gap. The production-consumption gap stood at 1.76 lakh tonnes in the first three months of current fiscal against 1.21 lakh tonnes in the corresponding period in FY18.
For the second consecutive month in June’18, NR consumption breached the one-lakh-tonne mark. The production has remained below 45,000 tonnes in each of the first three months, says the Rubber Board data.
As domestic price of NR fell on weak buying pressure from tyre firms, rubber farmers had been abstaining from tapping operations in their plantations, causing fall in NR production.
“Domestic NR production could meet only 42% of the domestic demand in Q1 of current fiscal. Such scarcity and grossly inadequate availability of domestic NR is leading the tyre industry to a precarious position. The dependence on expensive imports will need to go up significantly if tyre manufacturing operations are to be sustained in the country,” says Budhraja.
Consistent fall in the domestic availability of NR and its erratic supply is hurting the production process at tyre companies at a time when a large capacity is going on-stream, according to an ATMA release.
However, customs duty on NR import is 25%, higher than other NR importing countries, despite acute domestic crunch.
The tyre industry needs to adhere to pre import condition for NR import against (tyre) export obligation.
ATMA is also worried that export obligation period (for tyres) has been reduced from 18 months to six months.