Indian Tyre Industry Seeks Radial Duty Reduction

The All India Tyre Dealers’ Federation has urged the Indian finance ministry to rationalise excise duty on automotive tyres, supporting the introduction of radial tyres. In its pre-budget memorandum, the federation requested the government to fix excise duty on radial tyres at the rate of 16 per cent on heavy vehicles and at 8 per cent for tractors. The federation has also been pressuring the authorities to lower import duty on tyres.

”Duties should not be reduced across the board but rationalised in a manner that it gives due preference to encourage new technology over the outdated ones in emerging transport scenario,” the federation said.

At present, automotive tyres attract basic excise duty of 16 per cent. A special excise duty (SED) of 16 per cent is also charged over and above the basic duty. The federation said that differential tax treatment would also help in reducing fuel consumption and the country’s tyre replacement market.

Earlier, tyre dealers from across India had urged the Indian government to lower the import duty on tyres by 15 per cent to five per cent while maintaining the excise duty, in order to “checkmate the activities of the domestic tyre majors.” The AITDF has asked the government to provide a level playing field to domestic tyre dealers, who want to purchase foreign brands at competitive prices.

“The countervailing duty (excise duty) may remain unchanged for both the domestic and imported tyre brands. However, import duty for truck and bus tyres should be reduced to five per cent from the present 20 per cent instantly rather than waiting for the next Union Budget,” the AITDF said in its statement. The federation also said that though the tyre prices were raised by the manufacturers in response to escalating rubber prices, they complained that there has been no sign of reduction in prices with the lowering of the natural rubber price.

In another statement, the federation said that some of the domestic tyre manufacturers were making “wrong noises in order to retain their oligopolistic hold over the tyre dealers and consumers.” Since the first week of January the country has experienced multiple reductions in import duties, which resulted in increased choice and lower prices for tyre dealers. Imported tyres have fallen between 9 and 13 per cent, the statement said.