The All-India Rubber Industries Association (AIRIA) has sought duty free import of two lakh tonnes of rubber to overcome the situation arising out of the steep rise in prices and the acute shortage of natural rubber.
According to the association, the rubber industry with over 90 per cent of the units belonging to medium and small scale sector has been severely hit in the wake of the price increasing from Rs 65 a kg in March last to Rs 130 a kg in December – an increase of over 100 per cent in a 9 months. Domestic rubber production is continuously falling short of consumption, leading to poor availability even during the peak tapping season,.
The prices of finished rubber products cannot be increased to cover the rise in rubber cost as the industry is just coming out of a severe recession.
Moreover, many contracts are fixed ones, leaving little scope for price corrections,” Mr T K Mukherjee, President of AIRIA, said in a statement. Rubber units are not in a position to import rubber due to an import tariff of 20 per cent.
Serious anomaly of inverted duty structure with import of rubber at 20 per cent and most finished products at 10 per cent or lower duty are creating further complications for the industry, he said.
According to the association, China recently reduced the import duty on natural rubber by 20 per cent on RSS 3 and 23 per cent on crumb rubber, while there is no duty on rubber compound for import from South-East Asian Countries and 8 per cent from other countries.
AIRIA said the Customs duty on natural rubber should be cut from 20 per cent to 10 per cent. The duty should charged on ad valorem basis rather than on percentage basis.
The association sought a review on the functioning of commodity exchanges as it suspected the reason for soaring of natural rubber prices to be partly due to speculation on the commodity exchanges.
Two million people directly or indirectly depend for their livelihood on the rubber industry and to avoid large scale retrenchment, it is imperative that the Government comes forward and takes remedial action immediately, Mr Mukherjee said.
Source : Business Line