All India Rubber Industries Association (AIRIA) has urged the government to cushion the blow of the 50 per cent US tariff on Indian rubber products and to act swiftly with export incentives, interest free loans, and faster FTA negotiations to open new markets.
Shashi Singh, President of AIRIA stated that the implications of tariff on rubber products from India to the US can have significant economic, trade, and strategic implications for various stakeholders, including exporters, manufacturers, both MSME and organized sector.
"The US tariff on rubber will significantly raise our prices in that market, making us less competitive against countries with lower duties like Vietnam or Thailand. This could lead to a sharp drop in export volumes, especially hurting MSMEs that form the backbone of our rubber goods sector, while also eroding the margins for larger manufacturers", he said. At the same time, government should also take steps to boost domestic demand through infrastructure, automotive and defense growth that could help the industry absorb this shock and build long-term resilience, he added.
The tariffs will increase the final price of Indian rubber products in the US market which could lead to a drop in export volumes as the US buyers may shift sourcing to alternative suppliers. The small and medium enterprises (SMEs) - which make up a large portion of India's rubber goods sector - may lose major contracts, Singh said. The emerging situation would lead to erosion in profit margins forcing exporters to either pass the tariff cost to buyers (risking volume) or absorb the cost (reducing profits). Both options hurt viability and growth, he said. To cushion the impact, the association has requested the government to offer measures such as export incentives, interest free loans, subsidies, or duty drawbacks.
The government should also push for FTA negotiations with other regions to open new markets and focus on growing infrastructure, automotive, and defense sectors to offset export loss. In 2023-24, India had a trade surplus of Rs. 5,267 crore with the US, against the total rubber exports of Rs. 7,505 crore and total import of Rs. 2,238 crore, he said.