India has no plans to cut import duty on rubber

MUMBAI: India is not planning to cut import duty on natural rubber, a top official with the rubber board said on Monday, belying hopes of tyre makers who were lobbying for a duty reduction.

There was no logic in reducing import duty as Indian tyre firms were unable to import 80,000 tonnes of natural rubber permitted under advance licenses, which are duty-free, said Sajen Peter, chairman Rubber Board, on the sidelines of a conference.

India has imported about 24,410 tonnes of rubber for April to August 2008, Rajiv Budhiraja, director general of the All India Tyre Manufacturers' Association, said. India imposes a 20 percent duty on import of rubber, but only 7.5 percent on import of finished tyres, enabling the import of cheaper foreign tyres, especially from China.

This has led tyre firms like MRF, Ceat and JK Tyre to demand a reduction in import duty on natural rubber, which makes up over 60 percent of the cost of a tyre. Chairman Peter also said that a cess of 1.50 rupees per kilogram on natural rubber will not be removed.

The rubber industry had asked the board to scrap the cess as rubber prices were already very high. Rubber prices had touched a record high of 142 rupees a kg on Aug 28. Peter said the cess would stay as the additional amount was passed on to the small and marginal farmers, who constitute about 80 percent of the total growers.

India is the fourth largest rubber producer in the world, producing over 9,50,000 tonnes annually