Low import tariffs are posing threats to the Indian tyre market, according to the Automotive Tyre Manufacturers’ Association (ATMA).
The tyre sector has adequate capacity with recent investments of Rs 26,000 crore in greenfield projects and expansions in line with capacity increase in the auto sector.
Demanding an increase in the import duty on tyres on par with natural rubber, ATMA said imported tyres accounted for an estimated 20% of the local market for truck and bus radial tyres for which new capacities have come up.
Quoting data from International Trade Advisory Services, ATMA said that more than 60% of such tyres were imported from China at an average unit value of US$106 which is lower than the raw material price.
In its pre-budget submission, ATMA has said the import duty on natural rubber is 20% while tyres can be imported at 5% or even nil duty under various trade agreements.
“For the successful implementation of the Make in India campaign, it is important that imports of finished products attract duties at least as much, if not more, than what is levied on raw materials,” said ATMA chairman Dr Raghupati Singhania.
Although tyres can be imported into India at concessional duties, the corresponding concessional duties for natural rubber do not exist since it falls in the negative list across most trade agreements. ATMA has asked for an increase in customs duty on tyres from the basic rate of 10 to 20% and putting imports of tyres in the negative list in all trade agreements where rubber is in the negative list.
ATMA has said duties on raw materials where domestic production falls short of domestic consumption need to be reduced as imports are inevitable to meet the domestic industry’s requirements. These include raw materials like nylon tyre cord fabric, rubber chemicals,steel tyre cord, polyester tyre cord and polybutadine rubber.