The tyre industry has opposed the Government’s decision to increase the import duty on rubber, saying that it will have adverse consequences for the user industry.

Anant Goenka, Chairman of Automotive Tyre Manufacturers Association (ATMA), said in a statement issued here that the decision to restrict imports will have adverse consequences for the tyre industry and its long term impact will be felt on the entire value-chain of rubber sector.

The increase in duty on natural rubber will severely impact the industry at a time when the automobile sector is witnessing a negative growth in major vehicle categories, including commercial vehicles leading to demand slowdown in tyre industry as well.

Commercial vehicle tyres account for over 60 per cent of tyre industry turnover and is a major segment for rubber consumption, he said.

ATMA said that the import of rubber is inevitable in view of widening gap in domestic production and consumption.

Quoting Rubber Board data, the Association said that during the last fiscal, the gap between domestic production and consumption of rubber was over 60,000 tonnes.

During the current fiscal also, the production is likely to lag behind domestic consumption by 50,000 tonnes despite slowdown in the economy.

At current price of approx Rs 157/kg, the import duty of Rs 34 will work out to 21 per cent which is far higher than basic duty on tyres of 10 per cent and effective rate of duty of 8.6 per cent from countries such as China in view of trade agreements.

The increase in import duty has, therefore, accentuated the already prevailing inverted duty structure in the industry.

(This article was published on February 27, 2013)
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