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Ban on import of rubber under ALS -- ATMA urges Govt to reconsider move

K.R. Srivats

NEW DELHI, July 11

THE Automotive Tyre Manufacturers' Association (ATMA) has urged the Government to reconsider its decision rejecting the domestic tyre industry's plea to permit duty-free import of natural rubber (NR) under the advance licensing scheme (ALS).

``To continue the ban on natural rubber import under ALS and at the same time suspend STC scheme of supplying rubber to advance licence holders is not a desirable step from the point of equity and the need to boost exports,'' ATMA letter to the Governmen t said.

ATMA, in its letter, had made a case for either lifting the ban on NR imports under ALS or the continuation of

STC scheme.

It contended that ALS had provided a level-playing field to tyre exporters and the scheme had contributed to the export growth of the domestic tyre industry. Tyre exports from the country is expected to cross Rs 1,000 crore this year.

The association claimed that open general licence route was not suitable for export production as NR import after payment of import duty would result in ``uneconomical'' export operations of the tyre companies.

Further, ATMA also said no rate had been fixed for tyres under the duty drawback system and, therefore, duty drawback could not be availed of by the tyre industry till a particular rate was fixed.

On the issue of STC sustaining a liability of Rs 54 crore in its intervention operation, which the Government had underwritten, the ATMA letter pointed out that tyre exporters were ``happy'' with ALS and that the ban on import of NR as well as subsequent introduction of STC scheme by the Government was done only at the instance of the rubber growers.

``Hence, would it not be more appropriate to categorise the subsidy as a notional benefit given to the growers?,'' ATMA asked.

The Association also drew attention to the rubber growers' ``appreciative'' gesture towards the Government's move to start STC scheme in place of the advance licence scheme.

``It is on account of this reason that the rubber grower representatives, along with the consuming industry, had at the Rubber Board meeting held on April 21 this year unanimously recommended continuation of STC scheme,'' the ATMA letter said.

Further, ATMA pointed out that if subsidy was to be given for NR export, then ``why question the subsidy given for export of a value-added product i.e tyres assuming that STC subsidisation is to the tyre industry.'' According to the ATMA letter, it was i ndicated at a Rubber Board meeting held in June 2001 that a ``subsidy'' for export of NR, amounting between Rs 3 and Rs 4.50 per kg, would be given.