Natural rubber prices have been the bane of tiremakers in India of late, and on Nov. 12 the New Delhi-based Financial Express reported that major tire manufacturers in India are considering production cuts to minimize losses arising from prices that have risen above Rs 200 (£2.77) a kilogram.
“We have no option but to scale down production,” Automotive Tyre Manufacturers Association (ATMA) Chairman Neeraj Kanwar said in a letter to Indian finance minister Pranab Mukherjee on Nov. 11. Kanwar, who is vice president and joint managing director at Apollo Tyres, urged for a meeting to resolve the rubber crisis. In addition to high prices, Indian manufacturers also have to deal with declining domestic rubber supplies and high duties on imported natural rubber.
A 20% import duty currently is attached to natural rubber, and calls from tiremakers for a 100,000 ton allowance at a concessional rate of 7.5% have not been heeded. Demands for India’s government to change the import duty from a percentage to a flat rate of Rs 20 per kilogram have also proven fruitless so far. “At current prices, the import duty component alone amounts to around Rs 40 per kilogram, which makes it unviable,” commented ATMA director-general Rajiv Budhraja.
The timing of this “rubber crisis” has been unfortunate. Neeraj Kanwar points out that as of late, encouraging growth has been seen in domestic tire demand and the Indian tire industry is geared up for major expansions and greenfield projects to meet the demand growth in tires. Yet Indian manufacturers will struggle to compete against their Chinese counterparts given that duties on imported sheet rubber there are currently 5.2%. The import duty structure in China allows importers to pay 20%, or RMB 1600 (£149.50), per ton, whichever is less. (Tyres & Accessories)
