Decline in natural rubber production, rising import duties on rubber put tyre industry in a fix

[caption id="attachment_728" align="alignnone" width="1024"] Natural Rubber production has dipped by 11 per cent between April-May 2015[/caption]

The rubber industry in India is going through a tough phase as the domestic Natural Rubber (NR) production witnessed a decline of 11 per cent during the first two months of 2015-16 fiscal year. Seeing the constant drop in the rate of production of natural rubber, the industry bodies have now asked the Union Commerce ministry to bail them out of this situation.

According to a report shared by Rubber Board, NR production in the country has been nosediving at an alarming rate for the past two years. In 2014-15, the year-on-year drop in production of NR was 15 per cent, whereas, during 2013-14, a decline of 14 per cent was registered. The rubber industry now seeks Centre's intervention in the matter so as to help tyre manufacturers respond to the growing demand from auto sector in the country.

“With automobile sector coming out of a long recession, the NR demand is counted to go up during the current fiscal. The tyre industry has put in large investments to meet the pick-up in demand. At this juncture, raw material concerns are likely to play spoilsport in the Make-in-India story as far as the tyre sector is concerned,” said Rajiv Budhraja, Director General, Automotive Tyre Manufacturers Association (ATMA).

Although the production rate of NR has been constantly falling, the consumption has increased by 4 per cent in 2014-15. This trend is expected to continue in a similar manner during the current fiscal. In fact, in the previous fiscal, the gap was alarmingly high at more than 3.6 lakh tonnes. Due to this shortage, tyre manufacturers in India are forced  to import rubber from foreign countries in order to meet the supplies.

While NR production in India continues to suffer, ATMA is disturbed by the rise in import duties on rubber as well. The industry wants the ministry to abolish purchase tax of 5 per cent on NR with immediate effect and give tyre manufacturers a much-needed respite.