Thousands of SME rubber goods manufacturing units in the country may face stiff competition against cheaper imports of natural rubber and its products from Thailand with preferential tariff set under proposed Indo-Thailand Free Trade Agreement (FTA).

The Union Commerce Ministry is working closely on the finalisation of the FTA between India and Thailand. It is expected that the government may keep natural rubber out of the purview of FTA which was earlier being considered for inclusion in FTA.

"If the government includes natural rubber in the list, rubber products should also be included in the list. The preferential tariff would be around 5%. With such lower rate of tariff, Thai rubber producers will export natural rubber and its products in a big way," a spokesperson of All India Rubber Industries Association (AIRIA) said.

The current import duty on natural rubber is 20% whereas most of the rubber products are imported with a peak import duty of 10%. “This is exactly opposite to government’s declared policy whereby the raw materials must have lower import duty than finished products are brought under the purview of the FTA with preferential import tariff,” KT Thomas, president of AIRIA said.

The domestic rubber goods market is dominated by the SMEs. "These SMEs will not be able to withstand the competition against cheaper imports from Thailand with preferential tariff and a large number of them may close down," he said.

Mr. Divya Aggarwal

Money Management Consultants Ltd

Senior Copy Editor, Money Management Consultants Ltd
New Delhi, India

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