Under pressure following rising imports and drop in domestic prices, the Government has revised the Customs duty structure for natural rubber.

The import duty will now be 20 per cent or Rs 30 a kg, whichever is lower, according to a senior Finance Ministry official. Earlier, it was 20 per cent or Rs 20 a kg, whichever was lower.

The new duty has come into effect from Friday. Currently, the landed cost is around Rs 160 a kg.

The move follows Members of Parliament from Kerala meeting the Prime Minister and seeking a review of the import duty. The MPs had sought doing away with the specific rate. But the Government has kept the ad valorem rate at the same level, keeping the international markets in mind, while raising the specific rate.

The ad valorem rate is levied as a percentage of the value of the goods, while the specific rate is fixed. The specific rate will come into play when prices of imports fall. Earlier, in a memorandum to the Prime Minister, MPs from Kerala said the decline in production and fall in prices would affect growers in the coming months.

Rubber imports this fiscal are projected to be a record three lakh tonnes against 2.17 lakh tonnes last fiscal.

Till November, 2.38 lakh tonnes have been imported. This has resulted in growers blaming imports for the drop in prices. Compared to around Rs 196 a kg in August, rubber prices are now ruling at Rs 158.

“It is a welcome step. It will provide some relief to the 1.1-million rubber growers in Kerala. But 20 per cent or Rs 30, whichever is higher, would have been a better proposition,” Kerala Finance Minister and leader of Kerala Congress K.M. Mani told Business Line .

Although the import duty has gone up, it may not impact the domestic tyre industry.

This is because the industry imports natural rubber through the advance licence route against exports, allowing them to import at zero duty.

>shishir.s@thehindu.co.in

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