The Hindu Business Line : Tyre makers want Customs duty cut on natural rubber

Mumbai, April 22 The Automotive Tyre Manufacturers Association (ATMA) has urged the Government to reduce the custom duty on natural rubber imports to 7.5 per cent from 20 per cent.

Mr Rajiv Budhiraja, Director-General, ATMA, said: “With the custom duty on tyres at 10 per cent and on natural rubber at 20 per cent, a serious situation of inverted duty structure has obtained whereby the duty on raw material (natural rubber) is significantly higher than the duty on the finished product (tyres). The situation contravenes the current policy of the Government to encourage value addition through indigenous production of finished products.”

Drawing a comparison with cotton, Mr Budhiraja said natural rubber and cotton had striking similarities — in that both are the key industrial raw materials for manufacture of finished products and grown in a few States. Like in the case of cotton, natural rubber accounts for a substantial percentage of raw material cost of finished product and deserves similar import duty cuts.

According to ATMA, natural rubber, in fact, deserves more sympathetic and urgent consideration as the existing Custom duty on natural rubber is 20 per cent as against the 10 per cent custom duty on cotton. The Government is exploring possibilities of reducing import duty on cotton from 10 per cent to 5 per cent.

As per ATMA estimates, there has been a 5 per cent increase in consumption of natural rubber while the production has dropped by 3 per cent in 2007-08 over the previous year. In order to meet the shortfall and avoid stock out situation affecting tyre production, 100,000 tonnes of natural rubber on adhoc basis needs to be allowed for import without any import duty, says the tyre body.

In its recent interactions with the Ministry of Commerce, ATMA has stated that peak customs duty on non-agriculture goods has progressively reduced from 50 per cent in 1996-97 to 10 per cent in 2007-08, while the custom duty on natural rubber continues to be retained at 1996-97 level of 20 per cent.

The progressive reduction in custom duty on tyres has led to a consistent increase in import and dumping of finished products, the association said.

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