This Article is From Feb 12, 2015

Tyre Makers Seek Doubling of Import Duty in Budget

New Delhi: Hurt by cheap imports from China, Indian manufacturers have asked the government to double import duty on tyres to 20 per cent in the upcoming Budget to bring it at par with natural rubber in order to provide a level-playing field to the domestic industry.

As part of the its pre-Budget submission, the Automotive Tyre Manufacturers' Association (ATMA) said they are at a disadvantage as tyres can be imported at a rate of 5 per cent or even nil rate of duty under various trade agreements, while the same for natural rubber is at 20 per cent.

"For successful implementation of Make in India campaign and to promote domestic manufacturing, it is important that import of finished products attract duties at least as much, if not more, than what is levied on raw materials," ATMA chairman Raghupati Singhania said.

While tyres can be imported into India at concessional duties under various trade agreements, the corresponding concessional duties for natural rubber do not exist since it falls in the negative list across most trade agreements, he added.

Tyre is perhaps the only finished product on which 'duty inversion' not only continues but has actually aggravated in recent years. This needs to be addressed and corrected on priority, ATMA said.

"ATMA has, therefore, asked for increase in customs duty on tyres from basic rate of 10 per cent at present to 20 per cent and putting imports of tyres under negative list in all trade agreements where natural rubber is also in the negative list," it said.

The domestic tyre industry has recently invested over Rs 26,000 crore on capacity expansion; however, low import tariffs in the country have encouraged large and growing volume of tyre imports, despite adequate domestic capacity already in place, it added.

"... more than 60 per cent of TBR (Truck & Bus radial tyres) import is taking place from China at an average unit value of $106 which is lower than raw material price. This is causing huge injury to the domestic tyre manufacturers," ATMA said.

Further, the organisation has asked the government to provide full exemption from customs duty on products like Butyl Rubber, EPDM and Styrene Butadiene Rubber (Tyre Grades) as they have no domestic production and imports are the only source.

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