The equivocation in rates on some products under Goods and services tax (GST) is making the natural Rubber industry to go down. Here are the reasons impacting the rubber industry:
Import of the Products from Outside:
- There is so many confusion under GST regarding the products made from natural rubber. On the other hand, we are purchasing the rubber from outside instead of a slowdown in the rates of natural rubber
- According to the latest reports, the prices are just slashed 9-10% from the last April prices. This is a great slowdown in the rubber industry. What we used to sell on 143 per kg in April, now have to sell it out on 129-130 per kg
- The noteworthy concern is that prices are going to under-perform in coming months more. As October and November are the peak production period for the rubber; it is going disadvantageous for the farmers. Despite the slowdown in rubber prices, we are still importing it from outside; it will definitely going to impact our domestic production
- B.K. Ajith, secretary, Association of planters of Kerala, had spoken on the issue and suggested the government to make relevant policies to put some restrictions on rubber imports during this peak season so that we can improve the prices and overcome the losses going to impact the industry
Uncertain and Higher Rates on Some Products:
The tax rate on some input materials use to make rubber has gone higher and another side there is uncertainty in rates on output products like rubber bands, etc. These changes are adversely affecting the production and growth of the rubber industry which needs to be sorted out soon.
Lack Of Demand from Micro and Small Industries:
The micro and small industries who are unregistered under GST’s new regulations are not demanding the supply of rubber products. Because their revenue and turnover are not that high so that they can register it and being unregistered they can’t claim for tax refunds. On the other side, they have to deal with buyer discharging the tax liability. These all circumstances giving a hard time to the small businesses.
So it is important that government should take strong steps so that small and micro businesses can cope-up with the new system.
Rubber Industry in Jalandhar Facing Tough Times Now
The Jalandhar rubber industry, which is famous across the country, is currently facing problems due to different government compliance. Most of the rubber companies had to shut down their units. The remaining rubber manufacturers in Jalandhar are facing tough times these days, especially due to the Value Added Tax (VAT) and because they are not getting timely refunds of credits under GST. Due to this, all of the working capital of the industry is stuck in the government treasury and the manufacturers are forced to pay interest to banks.
The situation is so bad that rubber merchants don’t know when and how they will get their refunds. The annual General Body Meeting of the Jalandhar Rubber Goods Manufacturing Association, an organization representing the Jalandhar Rubber Industry since 1964, was held recently under the association’s new head, R.K. Harjaai, which was attended by the representatives of more than 80 industries.
The meeting was attended by Paramjit Singh, AETC, Sales Tax Department, ETO Dilbag Singh Cheema, and Anjali Sekhri, who listened to the problems of rubber businesses and ensured that their issues will be further sent to the government at a proper level.
