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Synthetic Rubber Megaprojects to Accelerate the Growth of India's Rubber Industry

Editor: Dominik Stephan

Can new world scale plant projects turn the tide? India is one of the large importers of synthetic rubbers (SR) in the world and consumes half a million tonnes of synthetic rubber per annum. Now, the local industry longs fro greater independence...

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(Picture: PROCESS)

Mumbai/India - “The synthetic rubber (SR) plant being set up by Reliance Industries at Jamnagar will not only meet the rising demand for SR in India but will also immune the rubber industry from volatility in availability of the commodity,: said Nikhil Meswani, Executive Director, Reliance Industries Ltd at 62nd Annual General Meeting of All India Rubber Industries Association (AIRIA) in Mumbai.

According to Rubber Board figures, indigenous production of synthetic rubber is woefully behind that of its consumption. Total production of synthetic rubber stood at 112,886 tons during 2013-14 while consumption of synthetic rubbers was four times at 483,575 tons. Total import of synthetic rubber was 371839 tonnes during the year. The share of synthetic rubber in total rubber consumption in India is around 30% while the world average is 65 per cent.

India's Rubber Producers Under Pressure

Speaking about the challenges being faced by the rubber industry, Niraj Thakkar, President AIRIA said, “Inverted duty structure has been the bane of Rubber sector in India and has stifled the growth of this vital sector of manufacturing. Over the last few years, India’s Trade Agreements with Asian countries have led to a barrage of cheap import of finished rubber goods in India.

Between FY 09 to FY 11, India signed three major trade agreements with Association of South-East Asian Nations (ASEAN), Korea and Japan respectively. Trade deficit in non-tyre rubber products with these three trading partners has gone up from Rs 651 crore in FY 09 to Rs 1725 crore in FY 13, a growth of 165 per cent in four years, says a study of Ministry of Commercedata by AIRIA.

Cheap Imports vs. High Duties

AIRIA has stated that the import duty on raw materials is highest in India when compared to neighbouring rubber product manufacturing countries. For instance import duty on NR Latex is 70% in India while it is just 10% in China. Similarly in case of Synthetic Rubber the import duty is 7.5% in China as against 10% in India. India is deficit in both natural rubber and synthetic rubbers.

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