Rubber industry seeks reduction in import duty

All India Rubber Industries Association has requested the government to reduce import duty on rubber in line with inverted duty structure on other commodities, said AIRIA president MF Vohra.

"The current duty structure for rubber imports is exactly reverse of the avowed policy of the government to fix the duty on raw materials lower than the duty on finished goods," Vohra said.

At present, import duties on natural rubber and rubber latex are 20 per cent and 70 per cent respectively, whereas duty on finished rubber products is 10 per cent.

The country's natural rubber production in 2007-08 is pegged at around 875,000 tonnes, down from the previous estimates of almost 950,000 tonnes due to absence of tappers following a viral break out in rubber growing areas of Kerala and excessive rains during the main tapping period.

Consumption is the country is likely to exceed output by 100,000 tonnes.

Low production will lead to supply deficits and the country may have to depend on imports, he said.

"However, with such high import duties on raw materials, the rubber industry will face difficulties," Vohra said. Ideally, the duty structure should be reverse as observed in any other commodity, he added.

Under World Trade Organisation (WTO) norms, no country can impose such high import levy on industrial products.

However, to protect interests of grower community, the country has classified rubber latex as farm product, while rest of the world classifies it as industrial product.

But this anomaly was hitting user industry in the country, Vohra said.

Vohra also demanded removal of anti-dumping duties imposed on rubber imports, as domestic output was much below the consumption.

The levy creates monopolistic advantage to a few indigenous manufacturers.

Earlier, government had appointed the Huda committee to review the existing duties and suggest inverted duty structure.

The committee has already submitted its report, but government is yet to decide on it.