Tyre and rubber industries have sharply criticised the increase in import duty on natural rubber to 25% which according to them has led to worsening of inverted duty structure since tyres and other finished rubber goods can be imported at 10% and even lower rate of duty.
rubber consuming industries have therefore termed the decision to increase the duty as business unfriendly and a dampener on future investments in the rubber and tyre sector.
According to Raghupati Singhania, chairman, Automotive Tyre Manufacturers Association (ATMA) tyre industry has been bearing the brunt of inverted duty structure for a long time.
While import duty on natural rubber, the principal raw material was 20%, tyres as finished products could be imported at as low as 5% duty under various trade agreements. Increasing the import duty on natural rubber will worsen the inverted duty scenario, increasing the threat of large scale dumping of tyres in India.
The decision to increase duties goes against the spirit of rational taxation and will impact more investments in the growing tyre and rubber sector, he said.
NR duty hike a shock: AIRIA
Mohinder Gupta, President All India Rubber Industries Association (AIRIA) said that the news of increase in import duty has come as a rude shock to the MSME rubber sector comprising over 5500 rubber units. The duty on import of natural rubber in India is already amongst the highest in the world.
Small scale sector is finding it difficult to retain competitiveness against invasion of cheap import of rubber goods. Increase in duties on NR will add to the cost of production in India making it tougher for MSMEs to compete both in domestic and international markets. Exports will be impacted.
He added that India is grossly deficient in production of natural rubber. Domestic production and consumption gap has reached a level of 3.6 lakh tonnes and there is no alternative but to import rubber.
The decision to increase import duty will cause a severe blow to the value addition within the country and Make-in-India initiative of the government will be seriously compromised as far as rubber sector is concerned.
Already many small manufacturers have closed down across the country in the face of competition from cheaply imported goods. Many are shunning manufacturing in favour of trading of rubber goods imported from China and other countries.
The decision to increase import duties will further wean them away from domestic manufacturing leading to loss of large scale employment. rubber manufacturing and processing sector is providing employment to over 2 million people.
Consuming industries have therefore asked for rolling back of the decision and support the growers directly with subsidies.
– Business Standard
