The Rubber Board is reported to have approached the Commerce Ministry with a request to retain the prevailing structure of import duties on natural rubber for the next financial as well.
The import duty at the existing level is 25 per cent and fixing it under the current rates would help control imports. This would further help to restrict import to quantities that are absolutely essential, considering the interest of domestic growers, highly placed sources familiar with the development said.
Though there was a proposal to fix the duty at a flat rate of 25 per cent, it is learnt to have been shelved on account of the prevailing gap between production and consumption, the sources added.
It is pointed out by industry sources that the natural rubber consumption has gone up by four lakh tonnes to touch 10.96 lakh tonnes. However, the production is hovering at 7.16 lakh tonnes, which requires the need for imports to meet industrial requirements. Last year, the imports was 4,10,498 tonnes.
Due to Covid lockdown and restrictions, there was a decline in production in 2020. Though the situation has improved in the first half of 2021, the sector witnessed a price drop in the later part of the year. The revival of the market after the lockdown and the surging demand has pushed up consumption. But the tyre companies decision to maintain the production on a limited scale has hit the demand.
Besides, the Omicron threat has started posing a concern on demand. If production declines further, there is a fear in the market that the consuming industries may demand for more imports, the sources added.
However, the tyre industry maintained that the demand across all major tyre categories has weakened both for OE and replacement markets. Rajiv Budhraja, Director General, Automotive Tyre Manufacturers Association (ATMA) attributed the declining demand to mobility restrictions owing to Omicron, semiconductor shortages and the rise in fuel prices. This has led to supply constraints as well as sluggishness in demand for the auto sector, leading to fall in the production.
Being a derived industry, the tyre sector has been affected too, especially the tyre segments that are natural rubber intensive such as Medium & Heavy Commercial Vehicles and Tractors.
Quoting latest data, ATMA said that Truck & Bus tyre production declined by nearly 10 per cent in November. In the case of Tractor Front and Rear tyres, the drop in production in November is 28 per cent and 20 per cent respectively. The trend of decline in production seems to have continued in December and January also.
“We are expecting a recovery only by March end when the impact of the current wave of Covid is expected to be over. Much will depend on the Union Budget impact both for auto and tyre industries”, Budhraja said.
e.o.m.