Anticipation from reformist Union Budget

The Narendra Modi government will present its first budget on 28th February. The budget session of Parliament commence from today and concludes on 8th May. The Economic Survey will be tabled on 27th February and the Railway Budget on 26th February 2015.

The Society of Indian Automobile Manufacturers (SIAM) is hoping that the Finance Minister will roll-back the excise duty in the Union Budget 2015-2016. The excise duty cut which was initially implemented on February 2014 was finally rolled back as of January 2015. The excise duty hike has roughly translated into a 4%-6% price hike across different vehicular categories which had an adverse affect on demand.

The import duty on natural rubber in China is 10%, while in India it is 20% or `.30 per kg, whichever lower. The import duty on finished rubber products is between 0 to 10%, while the duty on raw materials for the rubber industry is between 5 to 70%. All India Rubber Industries Association (AIRIA) in its pre-budget presentation to government has asked for lowering of import duties on raw material and raising of duties on the import of finished rubber products.

 

Inverted duty system has affected the growth of Indian rubber industry, as the country is deficient both in natural rubber and synthetic rubber production which are imported. Hence, the cost of finished goods made from these imported raw materials also increases, hard-hitting the domestic manufacturers, mostly the small and medium enterprises. As small manufacturers can’t compete with cheaper goods imported from China and other countries, many small rubber goods manufacturers have turned to trading of rubber goods leading to a loss to the exchequer and also loss of employment.

The benchmark RSS4 grade rubber closed at `.141.55 a kg at Kottayam, while RSS3 grade closed at `.117.96 a kg at Bangkok and Malaysian SMR20 closed at `.88.06 a kg. On National Multi Commodity Exchange March 2015 futures closed at `.126.47 a kg, April at `.127.53 and May at `.128.50 a kg. On Tokyo Commodity Exchange, February 2015 futures series closed at ¥210.4 a kg, March at ¥217.8, April at ¥218.6, May at ¥219, June at ¥217.2 and the contract for delivery in July 2015 closed at ¥216.9 a kg.

To read Rubber4U – 15th February 2015 issue: http://rubber4u.com/Public/Abcd.pdf

For Union Budget 2015-16 Highlights visit: www.rubber4u.com