Indian Tyremakers at Odds with Rubber Board

Tensions between India’s tyre industry and the government run Rubber Board have recently been under strain and appear to be getting worse. Representatives from the tyre industry claim that a drop in natural rubber production of close to 50,000 tonnes since May stands to cost the industry Rs 20 billion (£242.6 million) annually, yet these concerns have been dismissed by the Rubber Board, who argue such dire predictions are no more than a ploy by the tyre companies in order to secure a reduction of import duties on rubber.

Chairman of the Rubber Board, Sajen Peter, states there are no grounds for the tyre manufacturers’ claims. “This year we had projected production to be 8.74 lakh (874,000) tonnes (and domestic consumption to be 8.53 lakh (853,000) tonnes,” he told India’s The Economic Times. “Availability is not a problem at all, even though the chickengunia disease has affected our tappers. Tyre companies have been pushing to reduce the import duty on rubber for a long time now and we are going to fight them till the very end.”

Natural rubber prices in India have increased by 24 per cent over 2005/06 prices to Rs 83 (£1) per kilogram. D Ravindran, director-general of the Automotive Tyre Manufacturers Association (ATMA), argues that a temporary reduction of duties is necessary. “The 50,000 tonnes of shortfall will force us to import rubber at a high import duty,” he said, adding that tyre manufacturers “don’t want a permanent duty waiver, but only on the shortfall.”

Customs duty on natural rubber entering India can be as much as 20 per cent, whereas the top rate for other products classified by the WTO as non-agricultural goods is 10 per cent. “This is a classic case of inverted duty structure,” commented Ceat managing director Paras Chowdhary. “The current price of Rs 83 is highly unrealistic,” he added. “We were told to believe by the Rubber Board that stock levels were enough to satisfy our demands, but if they keep changing their version so often we don’t know what to believe.”