Centre moves to revise duty-free rubber import norms after fears raised by Kerala growers
Having battled unstable prices and unfair trade practices for decades, rubber growers in Kerala finally have something to cheer about with the Union government now moving in to address some of their key concerns.
Taking a serious note of their concerns over tyre companies bending the rules under the pretext of Standard Input-Output Norms (SIONs) to suppress domestic prices, the government has kickstarted works to update these decades-old norms. These norms, which specify how much raw material is needed to produce a finished export product, are crucial for the tyre companies availing themselves of duty exemptions.
Official sources say the Directorate General of Foreign Trade (DGFT) under the Union Ministry of Commerce and Industry has issued a Trade Notice announcing a comprehensive review of the SIONs applicable to automobile tyres. This follows mounting pressure from Kerala's rubber growers to curb illegal or excessive import of duty-free rubber.
The DGFT has also sought data to verify claims that tyre manufacturers have drastically reduced the use of natural rubber in their production process. While the existing norms, set in the 1970s, allow for 44% natural rubber in tyre manufacturing, actual usage today has dropped to just 18-20%, allege the growers.
'This loophole is hurting us badly,' says Babu Joseph, general secretary of the National Consortium of Rubber Producers' Societies (NCRPS). 'Tyre companies are still allowed to import rubber based on the old norms, effectively letting them bring in nearly double the required quantity duty-free. Worse, only 50% of that rubber needs to be used for exports while the rest is sold in the domestic market, pushing down prices and draining foreign exchange.'
According to him, the delay in renewing a critical notification has reportedly led to a surge in duty-free imports.
In March this year, a delegation or rubber growers, including major planters in the State, met with Union Commerce Minister Piyush Goyal to voice their concerns. Based on a representation given by the delegation, the government has begun responding on various key demands , which also include evaluating the impact of importing rubber and latex compounds and extending replanting credit support of up to ₹6 lakh at nominal interest.
Taking things forward, the Rubber Board has already convened a preliminary meeting of stakeholders in Kottayam.
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