Tyre producers seek no-duty rubber imports

With Budget Day coming closer, the Automotive Tyre Manufacturers Association (ATMA) has expressed concerns over the shortfall in the domestic supply of natural rubber, as reported in the Financial Express.

They also told the finance minister, in a pre-budget submission, that India's rubber output could meet only 50 per cent of the industry consumption needs, and so, the ATMA has called for zero-duty rubber imports under the Tariff Rate Quota scheme. High import duties up to 20% are imposed on raw materials for the tyre manufacturing industry.

“It would be fair to ask for a reduction in customs duty for raw materials which the domestic capacity is insufficient to meet domestic demand,” said the tyre industry’s submission to the finance ministry.

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Natural rubber demand-supply gap has widened from 7,220 tonnes in FY2008-09 to 5,69,940 tonnes in FY2018-19, a CAGR (Compounded Annual Growth Rate) of 40% in the last 10 years, said Rajiv Budhraja, ATMA secretary general, in the Financial Express report.

The tyre industry accounts for 68 per cent of the consumption of the country's natural rubber output, and natural rubber also accounts for 50% of the production cost for a tyre maker.

What is Tariff Rate Quota (TRQ)?

TRQ allows a number of specific products to be imported at a low or zero rate of duty. It is established for trade agreements between countries and balances the interests of local producers and consumers. The imports entering within the TRQ are subject to a lower tariff rate called the tariff quota rate.