India’s ATMA Repeats Demand for Duty Free NR Imports

With India’s tyre industry potentially facing a severe shortage of natural rubber, the Automotive Tyre Manufacturers’ Association (ATMA) has repeated its demand for the immediate duty-free importation of 100,000 tonnes of natural rubber.

The industry, which consumes 57 per cent of India’s domestically produced natural rubber, is said to be in the midst of its worst ever raw material availability crisis. The Hindu Business Line quotes ATMA director general Rajiv Budhraja as saying during the final days of July 2008 the availability of sheet rubber to the tyre industry has been ‘woefully inadequate’. Mr. Budhraja added that, as domestic natural rubber prices are even higher than those on the international market, the commodity now accounts for 41 per cent of the tyre industry’s raw material costs.

“It has never happened that the very availability of sheet rubber becomes an issue despite the fact that the natural rubber prices have touched a historic high. The average landed price of natural rubber was Rs 134 (£1.59) during July, which is 51 per cent higher than the average price in September last year,” he said.

This supply squeeze is taking place despite natural rubber production increasing almost 30 per cent between April and July. While consumption has increased only 21 per cent during this period, it is believed, said Budhraja, rubber growers and traders are holding onto their stock with the expectation of further increases in the price of rubber.

He added: “The supply crunch, if continued, is likely to seriously disrupt production schedules of tyre companies. We therefore urge the government for immediate intervention by way of allowing the duty-free import of 1 lakh (100,000) tonnes of natural rubber to tide over the current crisis.

“Under present circumstances, if duty-free natural rubber import is not allowed or the availability issue is not resolved, the competitiveness of Indian industry will take a severe hit. Already, the tyre manufacturers are faced with a non-level playing field in view of large-scale dumping of tyres in India from China.”