Natural rubber imports in to the country dropped close to 40 per cent during first quarter of the current fiscal, even as the gap between Indian and international prices widened.
With the sharp fall in imports, rubber availability has been lagging behind off-take by 33,000 tonnes as on June 30, tyre manufacturers said.
According to an analysis undertaken by the Automotive Tyre Manufacturers Association (ATMA) based on Rubber Board data, the availability, that is, domestic production plus imports, lagged far behind off-take, which is domestic consumption plus export, during the time period.
The deficit widened from 10,000 tonnes to 33,000 tonnes this year.
"Natural rubber consumption is rising at a faster pace than production.
Rubber import is, therefore, the only way to meet the shortfall.
However, with a hefty 20 percent import duty that amounts to around Rs 36 a kg at current prices, imports are not a viable option.
Natural rubber imports, therefore, are down by almost 40 percent in the first quarter," Mr Rajiv Budhraja, Director-General of ATMA, said.
As against an import of 50,000 tonnes of natural rubber in April-June quarter last year, the imports have dwindled to around 35,000 tonnes during the current year, with import plunging to less than 10,000 in .
"With the onset of monsoon, rubber arrivals have trickled down and no stock is emerging into the market despite the high prevalent prices," Mr John M. John, General Manager,Materials, Ceat Tyres, said.
From 1.2 lakh tonnes of last year, the rubber deficit this year is poised to grow to two lakh tonnes and imports would be the only way out for Indian tyre companies.
Also, tyre companies have put in large capacities to meet the rising demand from auto original equipment and replacement markets.
However, the continued shortfall in rubber is likely to slacken the process of manufacturing of tyres.
Mr Budhraja pointed out that the Chinese Government has moved in swiftly to help its tyre industry and Chinese tyre manufacturers are able to procure natural rubber by paying less than seven per cent import duty giving them advantage in terms of lower production costs compared to Indian manufacturers.
ATMA pointed to the inverted duty structure of rubber in China where sheet rubber attracts 20 per cent customs duty or yuan 1.6 a kg — whichever is less.
Thus, as the international price of natural rubber has soared, Chinese customs duty nowworks to around seven per cent.