Compliances Required to Start a Rubber Products Manufacturing Business in India
One of the largest advantages of starting a Rubber Products Manufacturing Business is that India offers all the essential elements required to boost the business.
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Introduction: Rubber Products Manufacturing
Rubber is considered a crucial part of modern engineering in India as well as all over the world. An element available to the world naturally as well as artificially, rubber is a substance readily available in the country as the market is spread and functioning at a large pace in India. The Southern region of India, mainly the States of Kerala, Tamil Nadu, and Karnataka are the largest producers of Rubber in the country with Kerala topping them all. The steady rise in the Rubber market has witnessed larger imports of Natural Rubber marking India among the top 5 importers of rubber in the world.
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The Government of India identifies rubber as an integral element and has delegated its functioning to the Ministry of Commerce and Industry. Further, under the umbrella of the Ministry, the Rubber (Production and Marketing) Act was constituted on the 18th of April 1947 which governed the laws relating to the production, facilitation, marketing, registration, and necessary licenses along with procedures of domestic as well as the export marketing of rubber with the aid of providing financial assistance. Along with it, the Indian Rubber Board was further constituted which was renamed The Rubber Board as a result of an amendment of the Rubber Act and is now known as The Rubber Production and Marketing (Amendment¬) Act, 1954.
What Are The Benefits Manufacturing Rubber Products?
One of the largest advantages of starting a Rubber Products Manufacturing Business is that India offers all the essential elements required to boost the business. To name a few-
- Reduced labour costs
- A flourishing domestic market
- An advantage in the costs of exports and shipping chargers
- A reduced rate of currency compared to Dollar
- Economic growth due to a demographic dividend
With the advancement of modernization, the rubber market has smoothed the way for those who part of the rubber business, domestically as well as internationally. Sectors like the automobile industry has enabled large opportunities as it is the one that consumes the maximum amount of rubber. Producing rubber and its products promotes the growth of one’s income along with improving the standard of living. Promotion of natural rubber is being facilitated due to the working of State and Local authorities as they are improving its plantation conditions and saving rubber trees. Lastly, with the rise of pollution of awareness, steps are being taken for Rubber manufacturing industries to abide by instructions from respective Pollution Control Boards.
What Are The Types Of Rubber?
Rubber and its products before being classified into types contain a few basic properties upon which they are used like its elasticity, resistance to tear and heat, strength and durability. Further, each kind of rubber contains distinct features and so is their usability defined. Following are the different kinds of rubber-
Natural Rubber (NR)
Natural Rubber is obtained through latex, a white liquid in the ducts of Rubber trees which naturally includes properties of strength and exceptional compounds that make it a substance of high resistance and excellent conductors of electricity. The primary source of natural rubber is from the Rubber trees called Hevera Brasiliensis. Latex from these trees is obtained through a process known as Tapping which is the constant wounding on the bark of the tree after which the latex flows out and is then collected. Up to 40% of the latex's composition is natural rubber, with the rest being water and other ingredients. A polymeric substance with a high molecular weight and elastic characteristics is technically known as natural rubber. The interaction of natural rubber with sulphur results in an interesting reaction. This process is called vulcanization. Due to this reaction, raw rubber loses its plastic and viscous properties and becomes elastic. Natural rubber is used in the production of a variety of products due to the special combination of several features.
Uses of NR
Natural rubber is primarily used in vehicles. The automotive industry uses around 65% of all-natural rubber. In heavy duty tires, natural rubber makes up the majority of the tire. In addition, NR is employed in the production of hoses, conveyor belts, foam mattresses, shoes, balloons, toys, and numerous other items needed in daily life. Additionally, it is used in engineering for road paving, vibration isolation, and shock absorption.
Synthetic Rubber (SR)
Rubber was in high demand due to the increased use of motor vehicles, particularly tires for motor vehicles and extracting natural rubber at a large scale altogether was not easy. Hence in order to fulfil the purpose, a substance with similar properties was invented in a laboratory. While natural rubber is a gift from the earth, synthetic rubber is created in chemical factories utilizing raw ingredients primarily from the petroleum sector. Butadiene, styrene, isoprene, chloroprene, isobutyl, acrylonitrile, ethylene, and propylene are significant raw ingredients used in the manufacture of synthetic rubber.
Uses of SR
For some applications, synthetic rubber is preferred to natural rubber if the price difference is not too significant.
- The production of tires is the major consumer of rubber in the transportation sector.
- The construction sector uses rubber in seismic bearings, hoses, tubes, and elevator belts, among other things.
- Rubber is used in consumer product manufacturing to create high-quality shoes, sports equipment, and erasers.
- The synthetic rubber known as polyisoprene synthesis is made of materials that have qualities that are exactly like those of natural rubber.
Reclaimed Rubber (RR)
Reclaimed rubber is the end product obtained by treating pulverized vulcanized scrap rubber tires, tubes, and other waste rubber objects with heat, chemicals, and vigorous mechanical processing. The plasticity of the recycled rubber is essentially identical to the original, making it possible to compound, treat, and vulcanize it. The elastomeric component's molecular weight is significantly reduced during reclamation, but the chemical unsaturation of the completed reclaim is basically unaltered from that of the original vulcanized trash.
Uses of RR
- Reclaimed rubber is more pressure resistant and weather resistant.
- It is intended to augment or take the place of new rubber in the production of rubber goods.
- It is comparatively cheaper to other available types of rubber.
- Recycled Rubber ensures the controlled emission of Carbon Dioxide.
Read Our Blog: Apply for Rubber Board License
What are the Licenses required to manufacture Rubber Products?
Following are the licenses required to start a Rubber Product manufacturing business in India-
A Dealer’s License
In order to obtain a license to buy, sell, or otherwise deal with rubber must submit a license application in form B. Documentary proof that the applicant has the legal right to possession of the proposed business location and storage must be attached with the application. It is necessary to pay a license fee of Rs. 5590 for a period of 5 (five) years at the rate of Rs. 1118 per year that can be broken down as Rs. 000 along with a GST of 18%. Demand drafts, money orders, or online transfers are all acceptable ways to send the money however Demand drafts must be made payable to The Deputy Director, Rubber Board.
If the Board is satisfied with the application, it may initially grant a licence in Form C for a period of three years. If the dealer wants to continue operating, the license must be renewed, which is valid for 5 (five) Years. An application in the prescribed form must be submitted well in advance of the license's expiration date. When the Board receives the required application and license fee, it renews the license.
At the Board's headquarters in Kottayam, Kerala, the Licensing Division issues a dealer's license.
Processor’s License
An applicant must submit an application in form B1 if they wish to purchase rubber for processing or selling it further. The following documentation needs to be submitted with every application-
- Documentary proof of self-attested ID and address supplied by Government bodies demonstrating the right of possession of the proposed factory premises
- A valid Pollution Control Board approval
- Project report and a valid Panchayath license
Only upon the following conditions shall a Processor’s License would be issued in the Form of C1-
- Adequacy of the applicant
- The suitability of the chosen place of Business
- Existence of raw materials
- Access to technological expertise
- If Plans have been established for technical requirements
- Economic viability
A few of Rs. 5,900 shall be paid against the License and shall be granted for a period of 5 (five) years. As Rs. 1,118 can be paid annually which is further broken down as Rs. 1000 along with an 18% GST. The payment can be sent by money order, demand draft, or internet transfer. Demand drafts shall be made payable to and must be drawn in the name of The Deputy Director, Rubber Board.
The Board has further decided to discontinue the Affidavit and Rubber Dealers Identity Card to be submitted by the applicants for special licence to deal in Rubber and for Processor’s licence as part of simplification measures. In place of these documents the self-attested copies of following documents may be uploaded/attached along with the application for fresh licences:
- Any identity card issued by the Government such as Aadhar card, Voters Identity card, Pan card, Driving licence as a proof of identity and
- Any of the above or bank statement/Telephone bill/Electricity bill as proof of address
Manufacturer’s License
Anyone wishing to produce any item made of rubber must obtain a Form E license from the Rubber Board. This license is granted for the purpose of purchasing a certain amount of rubber for three years, after which it must be renewed. Renewal of License makes it further valid for 5 (Five) years. One must submit an application to the Board in Form D along with the necessary information and pay the relevant license fee at the rates listed below in order to obtain a manufacturers license.
- If the projected annual rubber use is less than 4 MT – Rs. 590 broken down as Rs. 500 plus 18% GST.
- If the annual use of rubber is more than 4 MT- Rs. 11880 broken down as Rs. 1000 plus 18% GST.
Logo of “Indian Natural Rubber”
In case of a unit involved in exporting rubber, a logo has been produced and made public in order to establish a brand image for Natural Rubber manufactured in India. The "Indian Natural Rubber Logo" of the Rubber Board may be used on all of the produce of rubber that meet the necessary specifications by NR exporters and who sign up for the branding program. The INR brand is given to NR exporters that meet the established criteria for grade specifications, packing, and labelling regulations. The logo signifies a powerful brand call since it bears the Rubber Board's assurance of excellence. It also stands for a guarantee of the calibre of natural rubber made in India.
Project and test report
On a particular request from business owners, the Board can create detailed project reports to determine the techno-economic viability of an industrial unit. This provides all of the general details needed to establish an industry. These reports will be beneficial in securing funding from various organizations.
What Are The Responsibilities of a License Holder?
- Every licensed dealer is obliged to provide a genuine and accurate monthly return on forms H2 and L detailing the rubber stock that he has purchased, held, or sold.
- Every processor is required to file true and accurate monthly returns on forms H3 and L1, which include information about the rubber they have purchased, held, processed, and disposed of.
- Every manufacturer is required to submit true and accurate monthly returns in form K & L detailing the stock of rubber, including synthetic and reclaimed rubber, that he has acquired, held, used, or disposed of, as well as an annual return in form K1 detailing the consumption of various types of rubber used in his finished goods.
- The dealers, processors, and manufacturers shall send the returns to the Rubber Board's secretary in Kottayam as soon as possible after each month, preferably by the 20th of the following month.
- In addition to the aforementioned, each manufacturer must submit a semi-annual return within 15 days of the end of each half-year as stated above. This will help the Board determine how much rubber will be subject to an excise tax under Section 12 of the Rubber Act of 1947. Such amount on being demanded should be paid by the assessed within 30 days of receipt of such demand.
- To the Director (Licensing and Excise Duty), Rubber Board, payable at Kottayam, in cash at the Board's office in Kottayam, by money order, by bank draft, or by any other mode of payment through the bank, evidenced by payment receipt, every manufacturer must pay cess on the quantity of the rubber acquired by him during the period specified in rule 33(e), along with the return, not later than 30 (thirty) days after the period to The Board will take action to recover the outstanding amount with interest and collection costs as an arrear of land revenue if any manufacturer fails to pay the amount by the deadline specified.
- The licensees must also keep accurate and up-to-date financial records for their company and present them upon request for examination by the Board's authorized officers.
Recently, the Rubber Board of India has proposed substituting a one-time registration mechanism for the current periodic licensing scheme. This modification aims to liberate rubber dealers, producers, and processors.
Read Our Blog: Rubber Export License in India
What is The Penalty for Non-Compliance?
As per the provisions of the Rubber Act, a person shall be liable if performed any of the following-
- Go against any provisions or rules given under the Rubber Act, 1947
- Intentionally making a false statement or declaration in relation to any report under this Act.
- Anyone who stops a member of the board to work in accordance with his/her duties assigned to him/her under the aegis of the Act.
- Deliberately hides or conceals a record or accounts book from officers of the board when asked to produce it.
Such a person is subject to punishment, which may include both imprisonment for a time that may last up to 1 (one) year and a fine that may not exceed Rs. 1000 or both.
Conclusion
A Rubber Product Manufacturer shall comply with all provisions as laid down by the Rubber Board of India to avoid disputes regarding the same. Hence, keeping in order such compliances shall further enhance the business in India.
About the Author
Fatima Baig
Legal Content WriterA Post Graduate in the field of Corporate and Commercial Laws. I have worked as a freelance content writer for several Legal topics for over 5 years. I aspire to learn and grow in this field along with being able to portray my Legal skills through writing.
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