The tire industry claims that a dip of nearly 50,000 tons in natural rubber production in the last three months has put an annual financial burden of Rs 2000 cr on it. The Rubber Board, however, rubbishes the claim by saying that it’s a cunning ploy by tire companies to reduce import duties on rubber.
Taking the battle to the tire manufacturers court, Rubber Board chairman Sajen Peter told SundayET that their claims were totally baseless. “This year we had projected production to be 8.74 lakh tonnes and domestic consumption to be 8.53 lakh tons. In fact, compared to 60,000 tons of closing stock in July last year, we managed to touch one-lakh tons in the same period this year,” Peter said.
“So availability is not a problem at all, even though the chickengunia disease has affected our tappers. Tyre companies have been pushing to reduce the import duty on rubber for a long time now and we are going to fight them till the very end,” he said.
The tire industry is worried that it will face a loss of production as the price of natural rubber has spurted to over Rs 83 per kg against the average price of Rs 67 per kg that prevailed in 2005-06.
D. Ravindran, director-general of Automotive Tyre Manufacturers Association (ATMA), the apex body of tire manufacturers in the country, said, “The production and consumption pattern of tire companies is in place. But the 50,000 tons of shortfall will force us to import rubber at a high import duty. We don’t want a permanent duty waiver but only on the shortfall.”
Tire companies feel that the main problem is imports since customs duty on natural rubber is as high as 20%. The peak rate of customs duty on all non-agricultural goods, except natural rubber, is 10%. And ironically, natural rubber is classified as non-agricultural product under WTO dispensation. “This is a classic case of inverted duty structure,” argues a tire manufacturer.
“After Independence, only three times has the price of rubber per kg gone above Rs 70. The current price of Rs 83 is highly unrealistic too. We were told to believe by the Rubber Board that stock levels were enough to satisfy our demands, but if they keep changing their version so often we don’t know what to believe,” said Paras Chowdhary, MD of Ceat.
Peter of the Rubber Board retaliated by saying that for a long time domestic price of rubber has been far below the international price. “In the past three-four years, the loss faced by our farmers due to partial pricing has been around Rs 900 cr. It’s high time we set things right,” he reasoned.
Chowdhary said: “I completely agree with Mr. Peter when he says that the price of rubber in India should be at par with international prices. But then, why does he have a problem with our getting a duty waiver on imports?”
With a grim picture emerging on the natural rubber front, tire companies would be approaching the government to present their case soon. In fact, some time back, the Prime Minister had appointed a one-man committee with Anwarul Hoda, member, Planning Commission, as the chairman, to study inverted duty structure in respect of some products and make appropriate recommendations to the government for removing this anomaly. The Hoda Committee had also submitted its recommendations recently. Now the question remains, which way is the tire going to roll?
