Centre to resolve import duty disparity between rubber, tyres: Khullar

Centre to resolve import duty disparity between rubber, tyres: Khullar


New Delhi, Sept. 13

The Government will rationalise the import duty disproportion between tyres and natural rubber within a month, the Commerce Ministry said on Monday.

At present, there is an import duty of 20 per cent on raw rubber. But the import duty on finished tyres is only 10 per cent.

The import duty on tyres from South Korea and China (from where 85 per cent of the tyres are imported) is just 8.6 per cent. This leads to an `inverted duty structure' where the import duty on rubber (an input) is higher than that on tyre (the finished goods).

Mr Rajiv Budhraja, Director-General, Automotive Tyre Manufacturers Association, told Business Line, "The inverted duty structure erodes our competiveness. Ideally, duty should be lowest on raw materials.

"The tyre industry is facing a shortage of 10-15 per cent of natural rubber and this is expected to increase this year due to the high demand from the auto industry."

"Give me a month's time, we are trying to sort out the problem of inverted duty structure," the Commerce Secretary, Dr Rahul Khullar, told reporters on the sidelines of a CII event.

To protect tyre manufacturers, the domestic industry wants either a reduction of the import duty on rubber to 7.5 per cent or raising of the Customs duty on imported tyres to 20 per cent.

The latter option might face a stiff opposition from the local auto industry that imports tyres and, therefore, may see costs going up.

Prices of natural rubber prices in the country are around Rs 160 a kg, a major increase from below Rs 100 a kg in the year-ago period.

Due to this steep rise in prices, tyre makers want to import rubber but find it economically unviable due to the high duty. This situation has led to domestic tyre manufacturers increasing prices by around 15 per cent since January.

Following the sharp increase in rubber prices, the Automotive Tyre Manufacturers Association (ATMA) had written to the Prime Minister to permit the duty-free import of at least 200,000 tonnes of rubber. This is because demand for the item is more than its supply by around 200,000 tonnes annually.

The rise in rubber prices was due to a fall in its production following the drought last year and the increase in demand from tyre makers. Of the total natural rubber produced in the country, automotive tyre makers consume around 40 per cent, while non-tyre rubber sector use 60 per cent of the item.

The Government recently had taken off the restrictions on import of radial tyres due to increase in prices of domestic tyres and its shortage. The Delhi High Court had also recently directed the Commerce Ministry to look into the concerns of the rubber user industries and asked it to set up a panel comprising experts from the Rubber Board.


Spot rubber improves on short covering

Kottayam, Sept. 13

The domestic rubber markets turned better on Monday. In spot the prices moved up following the sharp gains on NMCE.

According to observers, there were no quantity sellers even at closing hours and the market still suffered from short supplies.

Sheet rubber improved to Rs 169 from Rs 167.50 a kg on fresh buying and short covering. The grade was quoted firm at Rs 168 (167.50) a kg on the official website of the Rubber Board. The volumes were not impressive.

Futures improve

In futures, the September series improved to Rs 172.84 (169.83), October to Rs 169.67 (164.92), November to Rs 169.02 (164.71) and December to Rs 171.20 (166.63) a kg for RSS 4 on the National Multi Commodity Exchange (NMCE).

The September futures for RSS 3 increased to ¥299.6 (Rs 165.64) from ¥300.1 a kg during the day session and then to ¥300.3 (Rs 165.77) during the night session on theTokyo Commodity Exchange (TOCOM). RSS-3 (spot) slipped again to Rs 163.52 (163.65) a kg at Bangkok.

Spot rates were (Rs/kg): RSS-4: 169 (167.50); RSS-5: 165 (162.50); ungraded: 162 (158); ISNR 20: 154 (152) and latex 60 per cent: 114 (112).




Malaysia rubber exports rise in July
Posted: 13 Sep 2010 04:28 AM PDT
Natural rubber production rose by 10,338 tonnes or 14.6 per cent to 81,083 tonnes in July compared to June, the Statistics Department sid today.

Production, however, dwindled by 1,821 tonnes from 82,904 tonnes on a year-on-year basis, it said.

The main portion of natural rubber production was contributed by the smallholding sector, with 93.2 per cent, while the estate sector accounted for only 6.8 per cent, it said in a statement today.

Natural rubber exports in July increased by 5.8 per cent as compared to June while exports on a year-on-year basis surged strongly by 22.5 per cent, it said.

The Standard Malaysian Rubber (SMR) continued to be the main contributor to exports, recording 71,318 tonnes, of which, 55.6 per cent was SMR20, it said.

The main natural rubber consuming industry was rubber gloves at 72.4 per cent, followed by tyres and tubes at eight per cent and rubber thread at 5.5 per cent, the department said.

The three industries consumed 32,808 tonnes or 85.9 per cent of the total domestic consumption of natural rubber, it added.
(btimes.com.my)





Centre's decision on rubber import duty not justified: KM Mani
Posted: 13 Sep 2010 04:26 AM PDT
Kerala Congress (M) chairman KM Mani has said that the decision of the ministry of commerce to modify the import duty for rubber could not be justified.

Inaugurating Rubber Board Technical Guild, an organisation affiliated to Kerala Congress, and works for the welfare of technical employees of Rubber Board yesterday, Mani said the Centre earlier imposed import duty of 40% has reduced to 13% which should be reexamined.

The former minister said the price of rubber will come down if the centre imports one lakh tonne of rubber through this duty structure.

Mani reiterated his demand that the import cess for natural rubber be put back at 20% and thus save the interests of lakhs of growers in the country.

He assured that all efforts would be made to raise the status of Rubber Research Institute of India on par with Indian Council for Scientific Research.

He urged the Centre to revise the payscale and perks of employees of Rubber Research Institute of India at the earliest.
(dnaindia.com)





Rubber prices to make condoms a costly affair
Posted: 13 Sep 2010 04:25 AM PDT
KOCHI: "Not tonight honey, it’s expensive.” This might soon replace the old line about headaches in Indian bedrooms, as condom manufacturers are grappling with an unprecedented rise in the price of latex, the key raw material behind the ubiquitous contraceptive. With latex prices ballooning nearly 200% year-on-year, condom manufacturers are set to announce price hikes across product lines, in a move that will likely have a deflationary effect on condom sales.

In a highly-competitive segment with little brand loyalty, firms are yet to decide on the quantum of the hike. Hikes are expected to be first announced in the high-end segments and are likely to be in the region of 10-15%.

As latex prices have risen dramatically in the course of the year, many small-scale manufacturers have gone out of business. “We have been forced to buy latex at a high price which is impacting our bottom line,” said Rajneesh Jain, director, Secure PersonalCare, a Gujarat-based condom manufacturer. At least half-a-dozen units in the small-scale sector have downed shutters, unable to contain the rising costs, he said.

It is not just the small-scale units that are feeling the pinch of latex price rise in the Rs 1,000-crore industry. Large companies are also moving to tide over the spike in prices. HLL Lifecare, which manufactures the Moods brand of condoms, is likely to announce a rate hike in two stages. It will increase its prices in the export market initially. “After this, we will bring about a similar price hike in the branded segment in the domestic market. But it will not be immediate,” M Ayyappan, chairman and managing director, HLL Lifecare, said. The whole process is likely to take about six months, he added.

In the branded segment, most companies are marketing different types of condoms. Moods, for instance, markets condoms that range from Rs15 to Rs 25 for a packet of three. TTK LIG, which manufactures the Kohinoor brand, and JK Ansell, the makers of the Kamasutra brand, are the top two players by sales, in the non-government retail market.

The government is the single-largest buyer of condoms and accounts for bulk of the revenues for many companies. The price of latex has gone up to Rs135 per kg from Rs46 per kg a year ago. Latex accounts for about 22% of the material costs in condom manufacturing. The industry has so far refrained from a price hike due to competition from imported condoms. Condoms from China and Malaysia are flooding the local market. On an average, they are about 15% cheaper than domestic brands, despite the 10% customs duty.

Despite the rise in latex prices, companies like Chennai-based TTK LIG has not raised price in the recent past. “We are studying the issue of latex price rise and would soon decide how to go about it,” said a senior TTK LIG official. The company has a requirement of 250 tonnes of latex per month. They also market the international brand Durex in India.

India’s condom industry has about 10-15 players, of which, only three to four are big players. Many small players manufacture for larger players under the original equipment manufacturer system, and also market regional brands.

While the condom manufacturers can think in terms of a price hike in the open market, they are in a tight spot as far as government supplies are concerned. For a company like HLL Lifecare, which sells 70-75% of its production to the government, this is all the more important. “We are hoping that there would be a rate hike,” Mr Ayyappan said. The company has made representations to the government for a price revision.

The government buys condoms from companies at an average price of Rs 1.40 to Rs 1.50 per piece. About 75% of the government’s purchase is from public sector unit, HLL, and the rest from private sector.
(economictimes.indiatimes.com)