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Industry demands duty-free import of natural rubber
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SME Times News Bureau | 05 May, 2010
The end-user industries of natural rubber, which mainly comprise micro, small and medium enterprises (MSMEs), urged the government for duty-free import of two lakh tonnes of rubber through a government agency, besides a ban on futures trading in rubber.
The joint appeal of the Automotive Tyre Manufacturers' Association (ATMA), All India Rubber Industries Association (AIRIA) and Indian Cycle and Rickshaw Tyres Manufacturing Association has been sent to the Finance and Commerce Ministries.
At a press conference in New Delhi, the chiefs of the three industry bodies asked for a ban on futures trading in rubber, a lowering of the import duty to 10 percent from 20 percent, and an increase in the import duty for finished products.
Speaking at the conference, ATMA President Neeraj Kanwar the boom in the automotive sector has led to huge rise in the demand for rubber from tyre manufacturers but natural rubber production has not gone up equally.
"In the last year, when rubber prices were at Rs 80-90 a kg, our margins stood at 11-12 percent. This year, because of the high prices the EBITDA has come down drastically. To circumvent a price of Rs 170 a kg, the tyre industry would need to raise prices 20-25 percent," he was quoted by a media report.
AIRIA President T.K. Mukherjee also said that consumption in 2010-11 is projected to go up by 20 percent, while production would only rise 5-6 percent.
"The Rubber Board estimates the current cost of production at Rs 50 a kg against the Rs 170-a-kg retail price. The Government should do its own investigation through the Bureau of Industrial Cost and Prices," he was quoted.
The industry bodies viewed that end-user industries of natural rubber have been under margin pressure due to rising prices of the raw material, and said that with more natural rubber earmarked for domestic use, the prices would drop or at least stabilise.
The rubber industry, which manufactures around 35,000 different products, has a total turnover of Rs 45,000 crore and employs more than five million people.
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