'Rubber industry hit by inverted duty structure'

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SME Times News Bureau | 27 Dec, 2020
The All India Rubber Industries Association (AIRIA) has called for rationalisation of duties on rubber goods and raw materials and said that the inverted duty structure impacts the local industry.

It also said that the government should consider providing adequate support and handholding to the producers and should device 'Phased Manufacturing Programme' for enhancing the localisation in the rubber sector of India.

The industry body noted that import of raw materials such as natural rubber and latex attract import duties of as high as 70 per cent, while that on finished goods is much lower, which impacts the local rubber goods producing industry, and stands as an obstacle towards the vision of 'Aatmanirbhar Bharat'.

"Some of the products which used to come from China are being routed through Thailand and Vietnam at either zero per cent duty or 5 per cent duty. India should correct the customs duty for the sector. The Indian rubber industry uses more than 70 raw materials and some of them also attract anti-dumping duty as well," AIRIA said.

As per the rubber industry body, the ideal duty structure for growth in the country should be the highest for finished goods, medium for intermediate goods and the lowest for raw materials. At present, the structure stands inverted, it said.

AIRIA further said that the sector has to resort to import of natural rubber as the quality produced in the country is not "up to the mark" and the tyre manufacturers buy the bulk of domestically-produced high-quality supplies, leaving no choice for the MSMEs and the other rubber goods producers than to go for imports for good quality raw materials from foreign players.

V.T. Chandhrasekharan, President of AIRIA said that in line with the Centre's vision to make a self-reliant India, the nation has tremendous potential to grow and could become a hub for sourcing rubber components and products if the inverted duty structure in the rubber sector is corrected.

AIRIA noted that there are many goods which use rubber as a component and the producers of these components are bound to import the products due to irrational duty structure.

J.S. Rangar, Sr. Vice President - AIRIA, said that in India there are more than 6,000 units of rubber goods, majority of which are in the MSME segment, making automotive components, tyres, footwear, adhesives, sports goods, cables, belting and hoses among others.

According to him, there is a huge space for these MSMEs to play their roles in the 'Aatmanirbhar Bharat Abhiyaan'.

"As one of the concrete steps towards realizing the ambition of self-reliance and a momentous stride towards 'Aatmanirbhar Bharat', the initiative is aimed at not only meeting India's future requirements of strategic and industrial sectors but also has the potential to mitigate the issues of security, licensing, technology obsolescence and most crucially cutting dependency on imports for multiple sectors," Rangar said.