The rubber industry, comprising over 6,000 manufacturing units, is pinning hopes on the Union Budget to correct the inverted duty structure and end the unfair advantage that China enjoys in the Indian market.
India has the highest import duty on rubber industry raw materials and lowest on finished rubber goods, according to All India Rubber Industries Association (AIRIA). “Inverted duty structure has been stifling growth in the sector. We hope the new government, with its agenda of reviving the manufacturing sector, will address this anomaly in the budget,” says Niraj Thakkar, president, AIRIA.
In its pre-Budget submission to the finance ministry, AIRIA has pointed out that the finished products can be easily imported as the duty on rubber products is between 0 and 10%, while the duty on raw materials for the industry is between 5% and 70%.
“Not only is the duty on raw materials higher, it is levied even on those materials which are not produced in the country. If the idea is domestic value addition, this anomaly needs to be corrected,” Thakkar adds.
According to AIRIA, stiff import duties on raw materials have eroded the competitiveness of the industry. On the other hand, lower taxation and export incentivisation policies of countries such as China have helped manufacturers in such countries to flood the Indian market with cheaper products.
The rubber sector has, therefore, asked for safeguard duty on finished rubber products so that domestic manufacturers, particularly SMEs, get a level-playing field.