The Centre’s decision to reject calls from the rubber lobby to reduce import duty on rubber reflects a delicate balance between industry demands and the interests of Indian rubber growers. The All India Rubber Industries Association (AIRIA), representing small and medium-sized businesses in the rubber sector, has been advocating for a reduction in import duty from the current 25% to 15%. However, the Ministry of Commerce and Industry has maintained its stance to protect the livelihoods of rubber farmers, citing concerns over the potential impact on domestic production.
India heavily relies on imports of natural rubber from countries like Vietnam, Malaysia, and Indonesia to meet its demand. The AIRIA’s push for lower import duties stems from the industry’s struggle with a shortage of domestically produced rubber. Despite being home to approximately 1.3 million rubber growers, India faces a significant deficit in rubber production. Kerala, in particular, accounts for a substantial portion of the country’s rubber output, producing nearly 600,000 tonnes in the 2022-23 fiscal year.
According to AIRIA President Shashi Singh, the current deficit of around 500,000 tonnes has forced the industry to depend heavily on imports. Singh emphasizes that the high import duty, coupled with an inverted duty structure, poses challenges for small and medium-scale domestic rubber businesses. The inverted duty structure results in higher duties on raw material imports compared to finished products, creating a disadvantage for domestic manufacturers.
Singh underscores the need for urgent action to address the inverted duty structure and alleviate the financial burden on domestic rubber businesses. The proposed reduction in import duty aims to safeguard the interests of small industries in India and promote competitiveness in the sector.
However, the government’s priority lies in supporting the country’s rubber farmers and enhancing domestic production. A senior government official highlights the government’s commitment to protecting the interests of farmers by increasing the financial package for the rubber sector. The enhanced package, totaling ₹708.69 crore for the next two years, aims to boost natural rubber production, reduce import dependency, and support farmers across the country.
The funds allocated under the package will be utilized for various initiatives aimed at promoting rubber cultivation, enhancing productivity, and reducing import reliance. One key aspect of the scheme involves providing planting materials worth ₹50,000 per hectare to rubber growers, supplementing ongoing plantation efforts under the Indian Natural Rubber Organization for Assisted Development (INROAD) project in the Northeast region.
Additionally, the scheme prioritizes expanding rubber plantation areas and accelerating development programs in non-traditional regions to diversify production. By incentivizing rubber cultivation and providing essential support to farmers, the government aims to bolster domestic production and reduce the industry’s dependence on imports.
Despite the AIRIA’s advocacy for a reduction in import duty, the government’s decision underscores its commitment to safeguarding the interests of Indian farmers and promoting self-reliance in rubber production. By prioritizing initiatives to enhance domestic cultivation and support small-scale industries, the government aims to strike a balance between industry demands and agricultural sustainability.
As the rubber industry navigates challenges posed by import dependency and inverted duty structures, collaboration between stakeholders and government support will be crucial in driving sustainable growth and resilience in the sector. Through targeted interventions and policy measures, India can strengthen its position as a leading player in the global rubber market while ensuring the welfare of its farming community.