Rubber Board leader defends India rubber import duty move

Kottayam, India - Claims that a recent move by the Indian government to raise import duties on compound rubber will not benefit rubber growers are “baseless”, according to the country’s Rubber Board. 

The United Planters Association of South India (UPASI) had raised concerns about the effectiveness of the increase as it applied only to ‘most favoured nation’ (MFN) countries, said Rubber Board executive director Dr K N Raghavan.

The growers association had also highlighted that the measure, presented 1 Feb in the government budget, would not apply to the ASEAN countries involved in the ‘free trade agreement’ (FTA), he added 6 Feb. 

India’s central government fixed the import duty of natural rubber (NR) at 25% or Rs30 per kg, whichever is lower, while the import duty on compound rubber was increased from 10% to be on a par with NR.

The latter move, noted Raghavan, was linked to a sharp increase in compound rubber imports - from 57,000 tonnes in 2017/18 to 114,000 tonnes in 2021/22.

This uptick had raised suspicions that ‘nominally mixed’ NR was being imported into India under the guise of compound rubber to avoid the previously set higher duties.

“NR has been kept outside the concessions provided to other nations through most preferential trade agreements,” according to Raghavan. 

“There is no preferential rate of duty for NR in [the] FTA with ASEAN nations, where most of the import of NR occurs,” he further explained. 

However, the FTA does provide a preferential duty rate to compound rubber imported from ASEAN nations, ranging from 0% to 5%, the executive director continued. 

Presently, around 55% of imports of compound rubber are from ASEAN countries, while the remaining 45% are from countries such as the US, Germany, South Korea, Italy, France, and the UK. 

Raghavan went on to concur with UPASI’s contention that some quantities of compound rubber can continue to be imported into India at concessional rates. 

“However”, he said, “they have lost sight of the fact that we cannot change preferential rates of import duty through the budget, and that can be done only through renegotiation of the FTA.”