The Indian Government had imposed restrictions in June 2020 on import of pneumatic tyres into the country in the hope that the domestic rubber market would grow. The Directorate General of Foreign Trade (DGFT) had notified that tyres that come under the restricted category cannot simply be imported which meant that the market cannot be flooded with tyres made from countries such as China.
However, the Indian tyre manufacturers were being effected by the restriction due to the inverted duty structure. The domestic tyre manufacturers have to pay higher taxes to manufacturer tyres locally which is higher than the import duty of tyres. According to few sources, many raw materials like the natural rubber had to be purchased with a tax rate around 27 percentage while import duty on tyres is just around 6 to 8 percent.
According to many Indian tyre manufacturing companies, this meant a huge loss. The whole purpose of the import restriction was to help Indian tyre makers. However, the restriction has become a huge problem even to the foreign tyre makers since tyre imports have come to a complete halt temporarily. Michelin is one such example since they have stopped the supply of four-wheeler tyres to their dealers in India due to the restriction.
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The French Tyre manufacturer says that the licensing restriction imposed on tyres by the Government of India has only increased the difficulty for many such companies including Michelin to import passenger car tyres to the country. This restriction has forced the company to fully stop the supply of four wheeler tyres to the country until further notice comes from the Indian Government. However, the company plans to continue its supply of truck and bus tyres as they are manufactured in Tamil Nadu in India.
Michelin has stated that they will now focus on making tyres for two-wheelers, trucks, and buses for India due to the Import restriction In India.
Michelin, in a statement to dealers, said, "As you may be aware, the recent import restrictions on tyres in India has impacted our passenger car business by constraining supplies and restricting our sales. Due to this uncontrollable situation of license limiting our supplies, we regret to inform you that we will not be able to supply passenger car tyres to you until further update from the Government."
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