Raw material availability and pricing is the biggest concern of the rubber industry. Not only are natural rubber prices ruling at record levels, but its very availability continues to be precarious, according to the All-India Rubber Industries Association. Futures trading is only fuelling speculation and artificial shortages in rubber and should be banned or suspended in view of the very high prices of natural rubber, the Association said in a pre-budget memorandum.

“The demand-supply gap is widening with supplies not being able to keep pace with the requirements of the tyre industry. We expect the demand-supply gap in domestic natural rubber production and consumption to be approximately two lakh tonnes in the next fiscal. We want the Government to allow duty-free natural rubber imports to the extent of the gap between domestic availability and consumption on a regular basis,” said Mr Neeraj Kanwar, Chairman of the Automotive Tyre Manufacturers Association (ATMA).

Pointing out that the tyre industry is a raw material intensive industry, the ATMA has requested for the waiver of customs duty on all raw materials which were not manufactured domestically. They include butyl rubber, ethylene propylene non-conjugated diene rubber and styrene butadiene rubber. Raw material costs accounts for close to 62 per cent of the tyre industry's turnover and close to 70 per cent of the production cost. Therefore, measures to improve the raw material scenario for the industry needs priority, the ATMA said.

In recent years there has been large scale import and dumping of tyres from China. Though the basic rate of customs duty on tyres is 10 per cent, tyres can be imported at lower rates of customs duty under various regional trade agreements. China and South Korea account for 70 per cent of the total tyre imports into the country as their effective customs duty works out to just 6.8 per cent, Mr Kanwar said.

The truck and bus tyre imports have gone up by around 35 per cent in 2010-11, when calculated on an annualised basis. In the case of passenger car tyres, imports were up 40 per cent. In his budget, we expect the Finance Minister to put a stop to the unfair trade practice of dumping of tyres by increasing the customs duty on tyre imports, Mr Kanwar added.

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