Indian tyre companies today said that they want the government to reduce import duty on natural rubber and incentivise making of radial tyres in the upcoming budget.
Finance Minister, Pranab Mukherjee is slated to present the Union Budget on February 26.
Leading tyre firm JK Tyre said they also expect the Centre to continue with the stimulus packages for some more time.
"We seek a correction in duty anomaly through reduction in customs duty on natural rubber from 20 per cent to 7.5 per cent. Alternately, we have suggested an increase in customs duty on tyres from the existing rate of 10 per cent to 20 per cent," Automotive Tyre Manufacturers' Association (ATMA) Director General Rajiv Budhraja told PTI here.
Currently, customs duty on natural rubber, the main raw- material for tyres, is 20 per cent, while the customs duty on tyres (the finished product) is 10 per cent, or even lower depending upon preferential or concessional tariff under various regional or bi-lateral trade agreements.
If customs duty on natural rubber is not reduced, an increase in duty on tyres (finished product) would also benefit tyre companies, Budhraja said.
Further, he added that "the government should earmark funds" to incentivise domestic production of radial tyres for trucks and buses.
According to ATMA, rise in radialisation from the present rate of 8-10 per cent to 25 per cent can save fuel worth up to Rs 20,000 crore for the country.
Therefore, policy support for radialisation in the commercial vehicle segment should be taken up as a priority area by the government, Budhraja said.
JK Tyre & Industries said, "We expect the government to continue with its stimulus packages for some more time to fuel growth momentum in India's economy."
"Withdrawal (of stimulus) means price increase of tyres which will, in turn, impact cost of transportation of every product," JK Tyre Director (Marketing) A S Mehta said.
Any cost increase would push-up inflation, he said.
"Further cost increase would accelerate inflation and that would adversely hit the economy in general," Mehta said.
Kolkata-based Dunlop Group's Chairman Pawan K Ruia said the government should cut import duty on natural rubber at 10 per cent as demand for tyres are increasing every day.
"If the government likes to promote the auto industry then why not tyres," Ruia asked.
On tyre prices, he said "any change in tyre prices is an outcome of change in price of raw materials as well as taxes and duties".
A duty-free natural rubber import would enable the Indian tyre industry to be competitive, another tyre maker Ceat said.
"If duty-free on natural rubber import is not allowed, the competitiveness of the Indian industry will take a severe hit," Ceat's Managing Director Paras Chowdhary, said.
At present, the tyre industry that consumes 57 per cent of the natural rubber produced in the country is facing its worst-ever raw material availability crisis.
Source : Business Standard