Tyre units hit by rubber price

Hit by 75 per cent rise in natural rubber (NR) prices in the last three years, the tyre industry yesterday demanded immediate withdrawal of rubber export subsidy scheme.

Prices this year have shot up to Rs 52,350 a tonne from Rs 30,360 a tonne in 2000-01, Rs 32,280 in 2001-02 and Rs 39,170 in 2002-03, says the tyre industry, attributing the rise largely to the subsidy for exports of natural rubber which have led to a major depletion of stocks.

"An increase of Re one per kg in NR price results in an additional financial burden (AFB) of Rs 35 crore annually on tyre industry. Therefore rise in prices since 2000-01 has resulted in an AFB of Rs 770 crore," chairman, Automotive Tyre Manufacturers Association, Raghupati Singhania, said here.

He said stocks have come down to less than 60 days of consumption of the rubber consuming sector and are expected to decline further in the coming months, leading to a critical situation.

International tyre price being higher than the Indian price, the Indian subsidy has enabled tyre manufacturers abroad to compete with Indian exports, he said adding tyre manufacturers elsewhere were getting access to cheaper raw- material from India rendering their counterparts here incompetitive.

The Rs 3,500-5,000 a tonne subsidy has led to an export of over 70,000 tonnes NR in 2003-04 against 13,300 in 2000-01, bringing down the year-end stock to 1.07 lakh tonnes against 1.84 lakh tonnes in 2000-01.