Automotive Tyre Manufacturers Association (Atma) today contended the production, consumption and stock data for the April-July period released by the Rubber Board.
According to an analysis by Atma based on the Rubber Board data, NR availability (domestic production + import) lagged behind its off take (domestic consumption + export) by a whopping 35,496 tonnes during the period April-July. In the corresponding period last year, the comparative deficit was 7,680 tonnes.
“NR Consumption is rising at a faster pace than production. NR import, therefore, is the only way to meet the shortfall. However, with a hefty 20 per cent import duty that amounts to around Rs 38 per kg at existing prices, imports are not a viable option, said Rajiv Budhraja, director general of Atma. However the board said in the April-July period production had increased by 6.5 per cent at 223,250 tonnes as against 209,825 tonnes in the same period last year. It further said that consumption till June has grown at a slower pace at 307,550 tonnes, registering a growth of only 3.3 per cent. In July consumption dropped to 77,500 tonnes from 78,910 tones in July 2009. Hence the growth rate recorded in the April-July period is lower.
Quoting the Rubber Board data, Atma said as much as 76 per cent of NR stock is with the growers and dealers. This lends credence to the fact that the prevailing high prices are prompting the growers to hold large stock despite lower international prices.
Atma has contested the projected buffer stock of 250,000 tonnes which it believes is at wide variance with the ground realities as the NR dispatches are all of fresh rubber. The Board’s latest data clearly states that the total stock as on July 31, is 220,083 tonnes as against 188,090 tones in the same month last year.
Budhraja said the tyre companies had put in large capacities to meet the rising demand from the Auto OEs and replacement market. The industry is likely to invest around Rs 12,000 crore for capacity expansion especially in the truck-bus radial. However continued shortfall in NR is likely to slacken the process of manufacturing of tyres.
The Chinese government has moved swiftly in aid of its tyre industry and Chinese tyre manufacturers are able to procure NR by paying less than 7 per cent import duty giving them advantage in terms of lower production cost in comparison to Indian manufacturers. Atma has therefore asked for imposing customs duty on NR on a fixed basis when the NR prices go beyond a certain level. Under the existing applicable ad-valorem rate of duty, when NR prices move up, the consumers not only have to pay more to import but also bear the burden of customs duty that goes up proportionately. Atma has alluded to the import duty scenario in China where import duty on sheet rubber is 20 per cent or Yuan 1.6 per kg, whichever is less. At current international prices of NR at around Yuan 23 per kg, the customs duty on import of sheet rubber in China works out to less than 7 per cent.