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Friday, Feb 13, 2004

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Industry & Economy - Tyres

Advance licence route `more attractive' for tyre makers

K.R. Srivats

New Delhi , Feb. 12

TYRE makers have expressed "slight disappointment" over the Commerce Ministry's move to slash the duty entitlement passbook (DEPB) rate on automobile tyres from 20 per cent to 13 per cent.

Tyre exports during fiscal 2002-03 stood around Rs 1,300 crore. DEPB rates are usually specified as a percentage of the free-on-board (f.o.b) value.

"The reduction in DEPB rate to 13 per cent has now made the advance licences route more attractive for the industry. We were expecting a DEPB rate of 15 per cent," the Director-General of the Automotive Tyre Manufacturers' Association (ATMA), Mr D. Ravindran, told Business Line here.

Imports under the advance licence route are duty-free, even though it may carry an export obligation.

There is no need for any upfront payment of import duties. But in the case of DEPB, import duties have to be paid upfront before they can be neutralised through DEPB credit after export of finished products.

Following the abolition of the 4 per cent special additional duty of customs (SAD) and lowering of the customs peak rate from 25 per cent to 20 per cent, the Director General of Foreign Trade (DGFT) earlier made changes to the DEPB rates to give effect to the reduction in customs duties.

The Finance Ministry had also recently revised all industry duty drawback rates to offset the reduction in peak rate of customs duty and also the abolition of SAD.

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