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According to the tyre industry body, natural rubber consumption is expected to increase further and the annual demand is expected to cross 13 lakh tonnes this fiscal.

Indian tyre industry body Automotive Tyre Manufacturers Association (ATMA) on Monday asked the government to allow duty-free import of natural rubber as shortage of the commodity in India has become a major deterrent for the industry to support domestic manufacturing.

“With the production of 7,90,000 tonnes as projected (in a normal scenario) by Rubber Board, natural rubber imports to the tune of at least 5 lakh tonnes are a must,” ATMA said in a statement. The tyre industry accounts for over 70% of natural rubber consumed in the country, it added.

According to the tyre industry body, natural rubber consumption is expected to increase further and the annual demand is expected to cross 13 lakh tonnes this fiscal.

While the Rubber Board had projected much higher production figures for the ongoing fiscal, ATMA claimed that the ground realities are not in line with the Rubber Board’s guidance as market arrivals of sheet rubber have dried thin. As per ATMA, the policy environment regarding the import of natural rubber is “highly restrictive”.

Too many restrictions on the import of natural rubber

During the first quarter of the current financial year, domestic natural rubber production could fulfil only 42% of the total requirement. According to provisional figures, as against natural rubber consumption of 3.01 lakh tonnes, natural rubber production stood at 1.27 lakh tonnes in the Q1 of FY22, it said.

With economic recovery back on track and the automobile industry witnessing increased traction, there is a surge in demand for tyres, the industry body said.

However, a squeeze in domestic availability of natural rubber, the key raw material, has become a major deterrent for the tyre Industry to support domestic manufacturing, ATMA said, adding imports of natural rubber are imperative to bridge the huge deficit, and for tyre plants to run.

There are port restrictions on the import of natural rubber which is allowed to be imported only from two ports, Chennai and Jawaharlal Nehru Port Trust (JNPT), Mumbai adding to the costs and delays. Moreover, the tyre industry needs to adhere to pre-import conditions for natural rubber import against tyre export obligation, it said.

Further, the export obligation period for tyres has been reduced from 18 months to only 6 months making it tough for the industry, ATMA said.

ATMA said it has urged the government to remove restrictions on the import of natural rubber urgently and allow duty-free import of natural rubber to the extent of the domestic deficit since imports have not shown to put any adverse impact on domestic prices that have been ruling higher than international prices for a long time.

Commenting on the situation, ATMA Director General Rajiv Budhraja said, “as such the tyre industry has been experiencing tightness in domestic availability of natural rubber during the ongoing fiscal. However, in the second quarter, a severe crunch is being witnessed while the natural rubber prices are shooting up.” The paucity of natural rubber needs to be addressed at the earliest so that tyre production processes are not disrupted, he added.