The Tyre industry which is in crisis due to the pandemic could be facing more issues due to further restrictions on import of natural rubber according to the Automotive Tyre Manufacturers Association (ATMA).
According to the ATMA, the production of domestic natural rubber is not enough to meet the demand of the tyre manufacturers. The domestic producers of natural rubber are only able to meet 60 percent of the demand which has resulted in the dependence on rubber imports.
Despite the demand for imports has increased because of unavailability of domestic rubber, the imports are subjected to high import duties. The import of rubber is at a cost of whooping 25 percent import duty which is considered to be the highest in the world.
According to Rajiv Budhraja, Director General ATMA, The import duty for manufactured tyres is 10 to 15 percent which has become one of the major issues in India.
Also see: Tyre Industry Faces Decline In Volume Year On Year 2020
In the FY20, the domestic natural rubber production was increased by 9 percent and the imports declined by 20 percent since there was a balance in internally produced rubber and number of imports.
The ATMA said that the domestic prices were 25 percent higher than the international prices at any given point of time. The natural rubber exports have come to a halt in the last 2 to 3 years yet the natural rubber was considered by the tyre manufacturers in the past few years to support the Domestic natural rubber producers.
The high import duty coupled with many other restrictions considered in few years time has caused problems after problems to the tyre manufacturing industry.
The port restrictions on import of natural rubber, Pre import conditions, the provision of NOC for importing quality rubber, Reduction of exports obligation period etc were created to improve the domestic natural rubber production and market conditions. However, these restrictions have not helped in the development of the production of natural rubber.
These restrictions have not helped the tyre industry grow in terms of production and export in any ways.
According to ATMA, due to the deficit in the quantity of rubber that is required by the consuming industry , the import of natural rubber should be duty free because it is not going to affect the domestic natural rubber producers and will benefit the growth of tyre industries in the country.
