Import restrictions on Natural Rubber will turn tyre Industry uncompetitive, says ATMA
Communications with the Executive Director of the Automotive Tire Manufacturers Association (ATMA) said the current regulatory requirements for natural rubber imports could adversely affect the tire industry, which is facing an unprecedented crisis.
Domestic production of natural rubber is very low and can meet only 60 per cent of demand. Imports are essential for the maintenance of tire plants, the industry body said.
ATMA Director General Rajeev Budharajah highlighted that while natural rubber imports are inevitable in view of the inefficiency of domestic production, imports are subject to high import tariffs without other regulatory requirements.
Natural imports attract 25 per cent import duty. It is the highest rate in the world. On the other hand, tires can be imported at a rate of 10-15 per cent (tariffs are very low under the trade agreements) and recent cases are reverse-duty construction, ”said Budharaja.
According to the ATMA, imports are a function of domestic availability. Gross domestic product grew by 9 per cent while natural rubber imports fell by 20 per cent. The country imported 4.6 lakh tonnes of NR this year. This compares to the domestic production and consumption gap of 4.1 lakh tonnes.
The ATMA denies that natural rubber imports hit domestic natural rubber prices, and that domestic prices at any given time are 25 percent higher than international prices.
Exports of natural rubber from India have decreased in the international market in the last 2-3 years. Still, the overall domestic production of natural rubber consumption interests, especially during the tire industry year, has shown solidarity with domestic natural rubber growers.
In addition to high import tariffs on natural rubber, the government has taken several regulatory measures over the past few years under pressure from natural rubber production benefits. These include port restrictions on importing natural rubber, the NOC system for importing quality rubber, the system for importing natural rubber, and reducing the export liability period.
These measures are intended only to improve the (basically price) situation of domestic natural rubber. On the other hand, however, these policy interventions did not serve the intended purpose. However, for the tire industry, these are hampering production and exports.
According to the ATMA, natural rubber should be allowed to be imported to a domestic deficit, as this would make no difference to domestic farmers as the industry has taken over the entire domestic stock. However, it certainly gives the tire industry a level playing field and benefits the entire value chain.