Import Restrictions On NR Will Turn Tyre Industry Uncompetitive: ATMA

Domestic production of natural rubber (NR) is woefully deficient and able to meet just 60% of the demand making its imports imperative to run the tyre plants. Adding to the existing restrictive provisions on import of NR will adversely affect the Tyre Industry which is already passing through an unprecedented crisis, Automotive Tyre Manufacturers Association (ATMA) has stated in a communication to the Executive Director, Rubber Board.
 
“Despite the fact that NR imports are an absolute must in view of paucity of domestic production, the imports are subjected to high import duties besides other restrictive provisions. Imports of NR attract a whopping 25% import duty which is one of the highest in the world. On the other hand, tyres can be imported at 10-15% duty (and much lesser duties under trade agreements) making it one of the longest-running cases of inverted duty structure”, said Rajiv Budhraja, Director General ATMA.
 
According to ATMA, NR imports are a function of domestic availability. For instance in FY20, NR imports declined by significant 20% since domestic production increased by 9%. During the year, 4.6 lakh tonne of NR was imported which compared favourably with domestic production-consumption gap of 4.1 lakh tonnes.
 
Refuting the charge that NR imports have led to suppression of domestic NR prices, ATMA has stated that domestic prices have ruled 25% higher than international prices at any given point of time. NR exports from India have come to a grinding halt in the last 2-3 years being out-priced in the international markets. And yet, in solidarity with the domestic NR growers, the entire domestic production has been picked up by the NR consuming interests, especially the tyre industry year on year.
 
In addition to high import duty on NR, the Government has taken a series of restrictive measures in the last few years, under pressure from the NR producing interests. These include Port Restrictions on import of NR, provision of NOC for import of Quality Rubber, Pre Import Condition for import of NR, reduction of export obligation period etc. Purportedly, these measures were intended with the sole purpose of improving domestic NR (essentially price) scenario. However in hindsight it can be seen (and established with facts & figures) that these policy interventions have not helped achieve the intended objective. But for the tyre industry, these have been stumbling blocks in increasing manufacturing and export footprint.
 
According to ATMA, import of NR to the extent of domestic deficit (quantity of rubber required by the consuming industry which cannot be met by domestic supplies) should be allowed duty-free since this will, in no way, cause any difference to domestic growers as the entire domestic stock is being picked up by the industry. However this will certainly provide a level playing field to the Tyre Industry and the entire value chain will get benefitted.