For second successive year in FY 2018-19, the exports of automotive tyres from India went up in double digits in rupee terms, fresh data released by Ministry of Commerce has shown. Tyre exports reached 12890 crore in FY19, a growth of 15% over previous year’s export figures.
ATMA has communicated to the Government that tyre Industry has potential of doubling exports from India in the next 3-4 years if a level playing field is granted matching other tyre manufacturing countries.
Natural rubber is a critical raw material however gap between domestic NR supply and demand is widening. Current NR production is able to meet just about 50% of domestic demand. Import of NR is imperative for tyre plants to run. However the policy environment is highly restrictive. Custom Duty (on NR Imports) is at 25%, much higher than the rate of duty levied by any other NR importing country.
There are further road blocks in accessing natural rubber. Tyre industry needs to adhere to pre import condition for NR import against (tyre) export obligation. Further export obligation period (for tyres) has been reduced from 18 months to only 6 months making it tough for the industry to access a raw material which is in short supply domestically.
While tyres can be imported under various Trade Agreements at rates which are much lesser than basic rates of duty, NR is in the ‘negative list’ in most of these trade agreements thus denying Indian industry the opportunity to import NR at concessional rate of tariff.
Tyre Industry seeks duty free import of NR to the extent of domestic deficit so as to get a level playing field. The export obligation period needs to be increased to 12 months like in case of other raw materials and Free Trade Agreements need to be given another look so that they don’t undermine the interests of domestic industry.