India’s ATMA Seeking a 7.5% Rubber Tariff

A memorandum sent by India’s Automotive Tyre Manufacturers Association (ATMA) to the nation’s finance ministry outlines the tyre industry’s hopes for a reduction in natural rubber duties. Reuters reports that the memorandum, sent in advance of the national budget, states “the customs duty on natural rubber should be reduced from 20 per cent to 7.5 per cent, lower than the duty on tyres.” At present natural rubber attracts a customs duty twice that of tyres, making imports more competitive than locally produced tyres.

“Or alternatively, the customs on tyres should be increased to 20 per cent from the current 10,” memorandum continued. This contentious issue – it should not be forgotten that, on average, natural rubber accounts for more than 40 per cent of total tyre cost for Indian manufacturers – is seen as a major factor behind the growing levels of tyres imported, particularly from China, in recent years. According to Reuters, eighty per cent of India’s tyre imports are now sourced from China and South Korea.

“The industry has been at a receiving end due to the ever increasing price of natural rubber in the domestic markets and a high duty, which makes imports unviable,” said A.S. Mehta director, marketing at J.K Tyres & Industries.

Indian tyre manufacturers are also seeking an extension of the excise duty cut introduced in 2009, a two-phased reduction from ten per cent to eight per cent. “The reduction in excise duty should be continued, if not for a year at least six more months,” Mehta added.

Reuters reports that analysts believe there is a “fair chance” of a reduction in duties, though not as steep as the industry seeks. “The duty reduction in rubber may not be more than four to five per cent, and that may happen in a phased manner,” commented a Mumbai based broker.