Scrap import duty on natural rubber; tyre makers

Industries mainly consisting of type makers along with small enterprises making products like shoes and household items have urged the government to allow the duty-free import of two lakh tonnes of rubber via a government agency and also put a ban on its exports.

The end user industry resorted to the step as they come under pressure fro increasing rubber prices and they believe that more supply of natural rubber for domestic use will bring down the prices in the country.

The user industries are also asking for a ban on futures trading in rubber and bringing down the import duty to 10 per cent from 20 per cent along with an increase in export duty of finished goods.

The Automotive Tyre Manufacturers' Association (ATMA), All India Rubber Industries Association (AIRIA) and Indian Cycle and Rickshaw Tyres Manufacturing Association have joined together and send requests to the commerce and finance ministries.

The representatives met the Prime Minister this February and later also discussed the matters with the Planning Commission.

President of ATMA, Mr Neeraj Kanwar said, "In the last year, when rubber prices were at Rs 80-90 a kg, our margins stood at 11-12 per cent. This year, because of the high prices the EBITDA has come down drastically. To circumvent a price of Rs 170 a kg, the tyre industry would need to raise prices 20-25 per cent."

He further said that the Rs 19,000-crore investments of the tyre industry may get delayed if high prices continue to put pressure on its margin. According to Rubber Board data natural rubber prices have risen Rs 149.48 a kg in March, from Rs

137.72 a kg in January.

The consumption in 2010-11 is expected to go up 20 per cent while the production will rise only between 5-6 per cent. India was the fourth largest global producer of natural rubber at 820,000 million tones in 2009 behind Thailand, Indonesia and Malaysia according to AIRIA data.

The overall rubber industry has a total turnover of Rs 45,000 crore and employs more than five million people in the country. The prices of rubber have risen mainly due to the high demand form the automotive industry.

(stockwatch.in)