Rubber import may be cheaper on duty change

KOCHI: Imported natural rubber will be cheaper now following a change in duty structure. The import duty of Rs 20 a kg or 20 %, whichever is lower, will lead to significant cost savings for the domestic tyre industry, besides helping companies better manage their inventory.
Following a demand by tyre makers, the government had lowered the duty on natural rubber in December to 7.5% for imports up to 40,000 tonne until March 31, after which it was to change to Rs 20 a kg or 20%, whichever is lower. "The change in duty would help in improving the availability of rubber in the market," said Vinod T Simon, president of All India Rubber Industries Association .
With rubber prices currently at Rs 233 a kg, the earlier duty of 20% would have imposed an additional burden of Rs 47 a kg on tyre manufacturers. India, the fourth-largest producer of natural rubber in the world, supplements domestic shortfall with imports.
According to estimates, rubber imports this year are likely to be around the 2009-10 level of 1.7 lakh tonne, while deficit is seen at around 90,000 tonne, against 99,165 tonne in 2009-10. While the tyre sector has estimated the deficit at 2 lakh tonne for the coming year, the Rubber Board is yet to submit a figure.
The Automotive Tyre Manufacturers Association feels imports will be unavoidable in 2011-12 in view of the high level of shortage. However, some feel the price situation will put a cap on the industry's imports.