Reports on Friday suggested that the government may increase customs duty on several products like paper, footwear, rubber items (pneumatic tyres) and toys in the forthcoming Budget for 2020 with a view to promote 'Make in India' and boost manufacturing growth.
The Commerce and Industry Ministry has submitted its recommendation wherein it has advised the government to 'rationalize' basic customs or import duties on over 300 items from different sectors, including pneumatic tyres.
For new pneumatic tyres of rubber specifically, it has recommended a hike in customs duty from 10-15% to 40%.
The move comes after multiple such yearly hikes for import duties on tyres in the last few years. In 2018, the customs duty for pneumatic car radials was increased to 10-15 %. The government in June, 2019 had imposed countervailing duty as well as anti-dumping duties for five years on new trucks and bus radial tyres (above 16 inches), which are imported from China. The 2019 hikes came owing to the increased fear that the US-China trade war would drive up exports of tyres to India, with the Chinese seeing the country as an easy alternative with significant demand.
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Since the trade war with the US, China has desperately tried to get its tyres to India despite the heavy duties. Imports from countries like Thailand and Vietnam have been on the rise and the Automotive Tyre Manufacturers Association (ATMA) strongly feels that these imports are actually Chinese tyres in disguise that are being rerouted through other countries.
The increase in the duties further to 40% will be meant to give the manufacturing sector a much needed boost and protect the tyre industry from disguised chinese imports from the likes of Vietnam and Thailand that continue to plague the industry. It is also a direct and effective way of dealing with the heavy subsidies that are offered by the Chinese government to their own tyre exporters.
The move is definitely going to help desi tyre companies flourish and even expand their portfolios. It is bound to level playing fields in the Indian tyre industry with the duties taking care of the foreign countries' subsidies as well as their underhanded manipulations of exporting and selling tyres in India that are 'below normal value'.
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