Tyre cos seek import duty waiver on raw materials to cut costs

Written by M Sarita Varma | Thiruvananthapuram | Updated: Feb 20 2013, 06:25am hrs
The tyre industry has sought a complete waiver of import duty on raw materials that are not manufactured domestically. In its pre-Budget memorandum to the finance ministry, the industry has also asked for lowering import duties on raw materials that are in short supply domestically.

The import of raw materials for the tyre industry is inevitable as India is deficient in many key inputs. However, stiff import duties on raw materials are impacting the competitiveness of the industry at a time when it is passing through a challenging phase in view of a slowdown in the economy as well as in the automobile industry, says Anant Goenka, newly elected chairman of Automotive Tyre Manufacturers Association (ATMA).

The tyre industry is raw material-intensive they account for over 70% of the industrys turnover. Input cost pressure has severely affected the growth of the tyre industry in the current fiscal, Goenka said, in the memorandum to the finance minister.

In case of key inputs such as nylon tyre cords, rubber chemicals, steel tyre cords, polyester tyre cords and Poly Butadiene Rubber (PBR), domestic production lags domestic consumption by 50%, 70%, 38%, 38% and 51%, respectively, says ATMA. Despite a significant shortfall in domestic supply, many of these raw materials attract a stiff import duty of 10%. ATMA wants the import duty on these these raw materials slashed by half.