Tyre makers seek curbs on imports

The tyre industry has sought a review of India’s regional trade agreements that adversely impact the domestic tyre industry.

In a pre-budget memorandum to the Finance Ministry, the industry pointed out that tyres in large volumes are finding entry into India while import of raw materials was restricted as a direct outcome of these agreements.

Basic customs duty on tyres is 10 per cent. However, under various trade agreements, the duty on tyres ranges between nil to 8.6 per cent facilitating tyre imports into India. While tyres (finished product) can be imported into India at preferential / concessional duties under various trade agreements, rubber (basic raw material) falls in the negative list (no duty concession) across most trade agreements thus impacting the tyre industry both ways, said Automotive Tyre Manufacturers Association.

Under Asean FTA, Indo-Sri Lanka, India-Singapore or India-Malaysia trade agreements, rubber is in the negative list leading to no duty concession. On the other hand, tyres can be imported at nil rates of duty under Indo-Sri Lanka and India-Singapore treaties while 6 per cent duty is levied under Asean FTA and 8.6 per cent under Asia Pacific Trade Agreement.

Low import tariffs in India have encouraged large and growing volume of tyre imports, despite more than adequate domestic manufacturing capacity and substantial investments. Hence, the government can increase the customs duty on tyres from existing rate of 10 per cent to a higher rate of duty without contravening WTO provisions as there is no bound rate on tyres, said Raghupati Singhania, Vice-Chairman, ATMA.

According to ATMA, in line with the capacity creation in the auto sector, the tyre sector has also added/expanded capacity across the country. The industry is, therefore, looking to the new government for scrapping of inverted duty structure and tweaking terms of trade agreements so as to make the industry competitive.

ATMA has also asked for reduction of import duties on raw materials whose domestic supply is deficient and complete waiver of duties on raw materials not produced domestically.

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