The rubber industry sought a comprehensive National Rubber Policy in the auto sector. The policy should outline medium and long-term objectives, roadmap and recommendations and sectional competitiveness among others. The Automotive Tyre Manufacturers Association (ATMA) had submitted the proposal, which is likely to come up for discussion in stakeholders’ consultations on May 9 in Kottayam, India.
For the last few years, domestic consumption of natural rubber has outstripped its availability. According to the Rubber Board, the gap between domestic production and consumption widened to 133,400 tons in 2013-14. The rubber industry projects the production will lag behind the consumption by around 100,000 tons this year.
According to the ATMA, natural rubber imports are imperative to meet the demand-supply mismatch, yet the industry continues to suffer from ‘inverted duty structure’. Various trade agreements India has signed with its neighbors have further aggravated the inverted duty structure of the industry.
Natural rubber is in the negative list in the trade agreements. Because of that, it is not eligible for any concessional treatment in duty. For example, under the Free Trade Agreement with Asean, tires can be imported at 6%, but natural rubber is in the negative list. Under the Indo-Sri Lanka agreement, tires can be imported at zero duty, but there is no duty concession on natural rubber. Under the India-Malaysia agreement, radial tires can be imported at 6% duty, but natural rubber is in the negative list.
“Policymakers need to consider that wherever the basic raw material (like NR for rubber industry) is in the ‘negative list’ and not eligible for any concessional treatment in duty, the finished product should also be kept out of the concessional duty,” said Raghupati Singhania, vice chairman of the ATMA. He added the country also needs a ‘National Rubber Policy,’ as rubber touches the lives of more than 1 million growers.
Amitab Kant, secretary in the department of Industrial Policy and Promotion, announced that the two constituted committees were seriously looking into both the inverted duty structure and inconsistencies in India’s free trade agreements. Kant said issues such as the inverted duty structure undermine the industry’s competitiveness.
