The widening of NR (natural rubber) demand-supply gap to 50% calls for zero duty rubber imports under TRQ (Tariff Rate Quota) scheme, argues ATMA (Automotive Tyre Manufacturers Association).
Tyre industry accounts for 68% of consumption of the country’s NR output.
In a pre-Budget submission to Union finance minister Nirmala Sitharaman, ATMA secretary general Rajiv Budhraja expressed concern over the shortfall in the domestic supply of NR, that forces tyre industry to import this raw material.
NR accounts for 50% of the production cost of a tyre maker.
What worries the industry is that the country’s rubber output meets only 50% of the needs of the consuming industry.
The growing gap has made ATMA reiterate its demand for zero-duty rubber imports.
“Natural rubber demand–supply gap has widened from 7,220 tonne in FY2008-09 to 5,69,940 tonne in FY2018-19, a CAGR (Compounded Annual Growth Rate) of 40% in the last 10 years,” said Budhraja, in the submission to MoF. NR is in the negative list in most FTAs (Free Trade Agreements) that India has signed. In tune with the concessional duty on finished products, NR should be allowed to be imported under Asean and Indo-Malaysia Agreements, ATMA urged the central government.
Even as tyre manufacturing is a cost-intensive, raw-material intensive industry, hefty import duty to the extent of 20% is imposed on some raw materials.
For instance, grades of nylon tyre cord, poly-butadiene rubber, steel tyre cord, rubber chemicals, polyester tyre cord and styrene-butadiene rubber, come under this group.
“It would be fair to ask for reduction in customs duty for raw materials which the domestic capacity is insufficient to meet domestic demand,” said tyre industry’s submission to MoF.
Source: financialexpress.com