Rubber body asks Centre to halt import duty hike

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Thiruvananthapuram | Published: April 28, 2015 1:30:59 AM

At 20%, India already levies one of the highest duties on import of NR and one of the lowest duties on import of finished rubber goods, according to AIRIA.

All-India Rubber Industries’ Association (AIRIA), which strings together 5,500 rubber SMEs, has asked the central government to stop import duty hike in natural rubber (NR) till  the report of an expert group on the proposed National Rubber Policy is out.  The report is expected before June.

“The Expert Group, formed in June 2014, has had a series of meetings with all stakeholders in NR and the final report is expected soon. In all fairness, the government should wait for the National Rubber Policy and take a concerted decision on major issues such as increasing duties,” says  Mohinder Gupta, president, AIRIA.

At 20%, India already levies one of the highest duties on import of NR and one of the lowest duties on import of finished rubber goods, according to AIRIA.

“Therefore, the competitiveness of the Indian rubber industry is affected and many rubber units have already closed down. Any arbitrary decision on rubber duties will diminish the elaborate exercise of formulating the national policy and the massive effort that gone into it. We fervently urge the government not to yield to any political pressure and take a well-considered decision,” said Gupta, in a letter to the government.

At the same time, AIRIA acknowledges that the rubber farmers are feeling the heat of drop in prices.  What the industry is worried about is the pressure of this price drop on jacking up import duty.  The difference between domestic NR production and consumption has grown to almost 4 lakh tonne. There is no other way but to import rubber to keep the factories running. Import duties on rubber, therefore, should be reduced and brought to the level of import of finished rubber goods so as to address inverted duty in the rubber sector, according to AIRIA.

Earlier this year, the government reduced the export obligation period to six months from 18 months wherever NR is allowed as an input under Advance Authorisation scheme. Rubber MSMEs are grappling with the complexities associated with the reduction in exemption period. Any further hike in import duties will aggravate the situation.

Gupta is not adverse to subsidy as such. “If the Kerala government or the Centre wishes to  support the rubber growers, it should be done directly by way of a subsidy to the growers as has been done by the governments of other major rubber producing countries, i.e. Thailand, Malaysia, Indonesia, Sri Lanka, etc.  No other country has penalised their respective rubber consuming interests by effecting hike in duties or imposing any other restrictions,”  said the AIRIA chief.

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