The tyre industry is upset that the Union Budget is set to puncture the sourcing of its chief input natural rubber (NR), while generously stretching the tyre business volumes. The industry’s continuing demand of customs-duty trimming on NR imports has apparently fallen on deaf ears.
It is probable that the tyre industry’s projected growth of 7% for the year will have to be re-estimated to factor in extra tyre volumes, Rajiv Budhiraja, director-general, ATMA told FE. The excise duty buoy to drive small car volumes could create higher tyre demand than before.
“However, domestic rubber availability is so unsatisfactory that the move will be counter-productive to tyremakers. We had been expecting the finance minister to do away with the inverted duty structure, under which the raw material (NR) attracts higher duty than the finished product,” he said.
As a check to the dumping of tyres from countries like China, Indian tyre majors had sought that 20% duty on rubber imports be trimmed to 7.5%. Tyres have a 10% import duty, which was down-pegged from the 12.5% of the last budget. NR alone constitutes 42% of the cost of a tyre.
The Rubber Board has projected an export target of 50,000 tonne in the current fiscal, despite a possible fall in production. About 19% fall in rubber output is feared, a senior Rubber Board official said.
Rubber growers, meanwhile, are buoyed by the Rs 19.4-crore price support fund proposed in the Union Budget. The price of RSS-4 is now running in a band of Rs 99-101 per kilo.