The paucity of natural rubber in the domestic market seems to have prompted its consumers to reiterate their demand for duty free imports of the commodity.
In a communication to the Rubber Board, NR consumers pointed out that the actual availability of NR was just about 30,000 tonnes against the projected production of 60,000 tonnes in June. In July, there was practically no selling of NR for most of the month. This has impacted rubber consumers across the board from small and medium rubber industries to tyre companies.
Rajiv Budhraja, Director-General Automotive Tyre Manufacturers Association (ATMA), said while tyre companies do anticipate domestic deficits in NR for which imports are being contracted, a certain baseline quantity is expected from the domestic market. In the absence of such arrivals, plant-level manufacturing is at stake. Some tyre plants of ATMA member companies have witnessed production sliding over 10 per cent in July owing to the NR crunch, he said.
Uncertainty in availability
Production planning is in total disarray. Imported NR which can be imported only at two ports is being transported from one plant to the other just to keep the plants running since tyre is a continuous process industry, he said.
“Uncertainty in domestic NR and latex availability is giving jitters to rubber MSMEs who do not have the wherewithal to have large inventories,” said Shashi Kumar Singh, President of All India Rubber Industries Association that comprises largely MSME rubber units.
MSME rubber consumers have also termed the available NR stock figures as not matching with ground realities and have asked for a reality check through an independent study.
Currently, domestic NR prices are ruling at a 13-year high. That should be enough trigger for the stock to find its way to the market. Since there is a continued acute shortage of NR and latex, the industry has urged the Rubber Board to recheck the stock position. Small scale rubber sector has been caught in the cross hairs of domestic shortage and high import duties on NR. The government needs to take into consideration the plight of MSMEs, Singh said.
Playing spoilsport
The MSME sector has asked for Government’s urgent intervention and a mechanism for adequate and stable availability of vital raw materials such as natural rubber where the current upsurge in domestic pricing is beyond any global trend and entails risk of crippling small businesses.
Tyre industry, according to Budhraja, has put in large investments to meet the continued pick up in OE and replacement demand but raw material concerns are likely to play a spoilsport in the manufacturing story as far as tyre sector is concerned.
Rubber consumers have, therefore, reiterated their submission for duty-free import of natural rubber to the extent of domestic deficiency to tide over the crisis. They have also asked for removing restrictions which allow import of NR through two ports only.