Wednesday, February 25, 2015

Don’t expect much


The Indian Union Budget 2015-16 to be presented on 28th February and a lot of anticipation is brewing in the rubber and allied industries which hasn’t seen much growth in the last two years. The industries have their own set of demands and are expecting changes in the Union Budget.

Auto sector is expecting roll back of excise duty hike to buoy demand, as excise duty hike has roughly translated into a 4-6% price hike across passenger vehicle categories, affecting demand. Avoid inverted duty structure - the excise duty on commercial vehicles is 8%, while raw material and engineering inputs are taxed at 12%.

Lower the Special Additional Duty (SAD) on imported raw material to 2% from 4%, and bring down customs duty on various inputs to 5% from 10%. Offer special incentives for automobile exports, policy on overloading of commercial vehicles and a policy towards replacement of vehicles to promote cleaner environment and fuel efficient vehicles. Clear the uncertainty over exclusion of automobiles from the Free Trade Agreement with the European Union. If it comes into effect, European carmakers would be able to sell vehicles at lower duty in India.

Rubber industry wants removal of anti-dumping duties on the import of raw materials like rubber chemicals (like Butyl Rubber SBR grade 1500/1700), which are not manufactured locally. Levy anti-dumping duty on imported Chinese tyres. The high import duty on rubber raw materials makes it difficult for the domestic tyre industry to compete against imported Chinese tyres.

Kerala state had sought Central assistance many times to save the rubber growers. The rubber growers had been demanding as high as a 75% hike, even if the import duty on rubber is raised, it will not be up to the level expected, the chance is to increase it from the current 20% to 30%. In the maiden budget of the BJP government, assistance for rubber farmers may not get attention, due to political reasons.

Rubber Mark, the apex federation of primary cooperative rubber marketing societies, had suggested setting up of a price stabilisation fund to compensate the loss to farmers due to price fall. Today the issue was raised during Zero Hour in the Lok Sabha. Congress and Left MPs from Kerala accused the government of not heeding to the plight of rubber growers and demanded an income stabilisation fund be set up to protect them.

The benchmark RSS4 grade rubber closed at `.140.30 a kg at Kottayam, while RSS3 grade closed at `.116.90 a kg at Bangkok and Malaysian SMR20 closed at `.87.19 a kg. On National Multi Commodity Exchange March 2015 futures were trading at `.126.40 a kg, April at `.127.85, May at `.128.70, June at `.130.20, July at `.131.45 and August at `.132.60 a kg. On Tokyo Commodity Exchange, March 2015 futures series closed at ¥217.7 a kg, April at ¥218, May at ¥218.1, June at ¥217, July at ¥215.9 and the contract for delivery in August 2015 closed at ¥214.5 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

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