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India’s NR production target in FY18 not achievable: ATMA

India’s NR production target in FY18 not achievable: ATMA

The Automotive Tyre Manufacturers Association (ATMA) has stated that in order to achieve India’s Natural Rubber (NR) production target of Eight lakh tonnes, the production needs to grow at a rate of 24% in the second half of 2017-18 over a year ago period which is highly unlikely. ATMA’s remarks came following the release of fresh data on Natural Rubber production by Rubber Board for the first half of FY18.

According to Rubber Board, India NR production the first half of FY 2017-18 is at 3.2 lakh tonnes recording five percent growth over the same period in the previous year. Rubber Board had projected NR production of Eight lakh tonnes during the FY 2017-18, a growth of 16% over previous year’s production of 6.9 lakh tonnes. In order to achieve the target, the production needs to grow at a rate of 24% in the second half of this fiscal.

“The grim situation on the NR front continues. Domestic production continues to be far below the domestic demand. The gap between domestic NR production and consumption is not showing any signs of bridging. Last year domestic deficit was 40%. In the first half of ongoing fiscal also, the deficit is at the same level”, said Satish Sharma, Chairman Automotive Tyre Manufacturers Association (ATMA).

On priority, the industry has asked for import of NR on a tariff rate quota (TRQ) basis at ‘nil’ rate of duty to the extent of the gap between domestic production and consumption. The industry has also asked for the removal of Port Restrictions on natural rubber which is permitted to be imported only at two ports (Chennai and JNPT) further adding to the cost & delays.

The demand-supply gap of NR during the first six months of 2017-18 is 2,06,880 tonnes (39.2%), according to ATMA

“Domestic tyre industry is facing acute NR scarcity notwithstanding the ongoing peak season in the country. There is availability crunch despite the fact that domestic NR has been fetching higher prices than prevailing internationally. There is a serious threat of disruptions to tyre manufacturing in the absence of adequate availability of NR,” Sharma pointed out.

According to ATMA, the existing NR scenario calls for a correction in the ‘inverted duty scenario’ as effective customs duty on tyres ranges between 0-8.6% whereas the basic duty on natural rubber in India is 25%.

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