Industry & Economy
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Tyres
Govt not inclined to relook at tyre import duties
K.R. Srivats
New Delhi
,
March 3
THE Finance Ministry does not seem inclined to accept the request of certain tyre makers for a relook at what some called a Budget-induced inverted import duty structure on the tyre industry.
Budget 2005-06 had reduced the basic Customs duty from 20 per cent to 15 per cent on most of the raw materials used by the tyre industry other than natural rubber.
The basic Customs duty on natural rubber, a main raw material, continues to remain at 20 per cent. Import duty on tyres has been slashed from 20 per cent to 15 per cent.
"In our view, the domestic tyre industry is better off under the latest changes brought about by the Budget. The recent years have seen good growth for the industry. Further, the tyre industry has also got a relief in the form of excise duty reduction from 24 per cent to 16 per cent," said Mr K.M. Chandrasekhar, Revenue Secretary.
Domestic tyre manufacturers are aggrieved on two counts. The first relates to the creation of an inverted duty structure: natural rubber import duty at 20 per cent and finished product (tyres) import duty at 15 per cent.
The second is the deepening of the duty differential (between natural rubber import duty and tyre import duty) on account of the Bangkok Agreement. Under the agreement, tyres can now be imported at 10 per cent against the hitherto prevailing duty rate of 15 per cent for imports from the signatories to the agreement.
With China now part of the Bangkok Agreement, domestic tyre manufacturers may have to face more intense competition in the form of increased imports from that country.
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