The tyre industry in India has asked for a complete waiver of import duty on raw materials used by it which are not manufactured domestically.
It also wants reduction in import duty on raw materials where domestic production is significantly short of domestic demand. In a pre-budget petition to the Union finance minister, Anant Goenka, new chairman of the Automotive Tyre Manufacturers Association (Atma), has said stiff import duties on raw materials are impacting the industry’s competitiveness. This is happening during a challenging phase in the economy and the automobile industry.
The tyre industry is input-intensive and their costs form 70 per cent of industry turnover. Input cost pressure has severely affected the growth of the industry this financial year, added Goenka. The recent drop in the price of natural rubber is a breather but cost escalation in other raw materials is a real threat.
In the case of key inputs, such as nylon tyre cord, rubber chemicals, steel tyre cord, polyster tyre cord and polybutadiene rubber, the domestic production lags consumption by 50, 70, 38, 38 and 51 per cent, respectively. Yet, many of these have an import duty of 10 per cent. Atma has asked for reduction in import duty on these raw materials by half.
Raw materials with no domestic production include synthetic rubbers such as styrene butadiene, butyl rubber and ethylene propylene diene monomer rubber. Atma wants full waiver on Customs duty on these raw materials. China and India are two dominant rubber raw material consuming countries and Atma says China has a lower duty structure for most of them, giving its manufacturers a competitive edge over Indian tyre manufactures.