Kerala chief minister Oommen Chandy has convened on December 18 a crucial meeting with the major tyre companies, in a frantic effort to prop the domestic natural rubber (NR) price.

Rubber growers have been coaxing the state government to  waive  5% purchase tax on NR  to wean tyre companies from their growing import appetite.

If two of the  biggest bulk buyers of NR — MRF Tyres and Apollo Tyres — are game to utilise this tax advantage,  the current trend of NR imports can be tightbelted, according to farmers. Tyre industry accounts for as  much as 65% of the NR consumption in India.

“Chief minister Oommen Chandy has, more or less, agreed to allow this waiver, so that the ailing rubber economy of the state can be brought back to its feet,” Siby J Monipally, general secretary, Indian Rubber Growers Association (IRGA) told FE.  “It would be an opportunity that tyre firms would be wise to leverage,” he says.

Even though NR consumption surged in the current year,  the tyre sector’s offtake from the local market has stayed subdued, as the industry leaned  heavily on imports to meet demand. According to the Rubber Board, India’s April-July NR imports in 2014 were 1,33,789 tonne compared to 90,580 tonne imported during the same period last year.

In desperation, the rubber farmers had, last week, even warned to boycott domestic tyre manufacturers and resort to buying of cheaper imported tyres, the same way as tyre industry imported the raw material NR.

Source:financialexpress.com