Tyre manufacturers’ body ATMA today said shortage of carbon black, a key ingredient for tyre manufacturing, in the domestic market has led to unplanned shutdown of factories.
In a representation to Ministry of Commerce & Industry, Automotive Tyre Manufacturers Association (ATMA) asked the government to allow domestic tyre makers duty free import of the raw material to the extent of existing gap between demand and supply in order to enable them continue with their planned production.
According to ATMA, tyre industry is left with no other choice but to import carbon black to meet domestic deficit, but a steep anti-dumping duty amounting to approximately 40 per cent of the import price is proving to be prohibitive.
“Some of the ATMA member companies are severely affected by the shortage of carbon black and capacity utilisation levels have come down,” ATMA Convener Supply Chain & Resources Group and MRF VP Materials, Mohan Kurian said in a statement.
He further said:“Now production planning is being tweaked to match with the availability of carbon black and thereby potential production is not getting fully achieved.” A mismatch of in-capacity addition by domestic carbon black industry in comparison to growing demand from the domestic tyre industry and increased exports of the raw material have led to domestic deficit, ATMA claimed.
The industry body said in 2017-18, domestic carbon black production stood at 8.4 lakh tonne, while actual consumption was at 9 lakh tonne and exports were at 1.2 lakh tonne. Import of the raw material stood at 96,000 tonne.
In 2016-17, domestic carbon black production was at 8.1 lakh tonne, with a similar amount of consumption, while exports were at 1.14 lakh tonne and imports stood at 84,000 tonne.
China is the single largest producer of carbon black in the world accounting for about 40 per cent of global production but a steep anti-dumping duty has been imposed on import of the raw material from the country, ATMA added.
ATMA said it has asked the government to allow tyre companies to import carbon black on a duty free basis to the extent of the existing gap between demand and supply to enable the domestic tyre industry continue with its planned production.
“Anti-Dumping Duty (ADD) applicable on carbon black imports from China needs to be waived till such time the domestic availability improves,” it said.
At the same time, export of carbon black from India needs to be regulated by way of fixing a minimum (higher) export price and / or quantitative restriction, ATMA added.
Kurian said there was an urgent need to work out sustainable ways of improving raw material availability for the tyre industry.
“Domestic tyre industry is anticipating good growth in tyre demand after a prolonged period of overall slowdown. It becomes imperative to improve the carbon black availability situation urgently,” he added.