India cuts rubber import duty, tyre makers rejoice

NEW DELHI (Commodity Online): Tyre makers in India have rejoiced at government’s decision to slash the import duty on natural rubber from 20 per cent to 7.5 percent.
The concession put forward by Govt are only for goods up to an aggregate of 40,000 metric tonnes of total imports during the remaining three months of the current fiscal ending March 31, 2011.
Earlier in May, tyre manufacturers had dragged the government to court, accusing it of having a discriminatory import duty structure. While natural rubber imports attracted a duty of 20 per cent, finished products such as tyres were charged just 10 per cent duty. The domestic tyre industry had protested against the inverted duty pyramid, but to no avail, Domain-b reported.
Budhraja, director-general, Automotive Tyre Manufactures Association (ATM), said that it was a positive step from the government, however tyre makers are still concerned over the alarming prices of natural rubber, which are at historic highs.
Kerala, the largest rubber grower in India had only a decreased output this season because of heavy rains in the region. India's natural rubber production fell by 5.4 per cent in November to 88,500 tonnes as compared to the last year.
The Rubber Board, however, notes that the cumulative production during the April-November period was up by 2.9 per cent to 546,150 tonnes.
Natural rubber imports in November were up by about 50 per cent to 10,750 tonnes. India imported 143,000 tonnes of natural rubber during the April-November 2010 period, slightly higher than imports in the same period in the previous fiscal.
There is also disparity in the price of domestic and international rubber prices. Natural rubber is being sold at Rs.207 to Rs.208 a kg in India, while international prices have shot up to Rs225. The tyre industry claims that international prices should be lower by at least Rs.6 a kg for imports to become viable, Domain-b reported.