MUMBAI (Reuters) - India's tyre industry will continue to push for a reduction in customs duty on natural rubber, as the duty charged on it is double than the finished product, an industry body said ahead of the union budget.
"As in the past we are looking forward to the correction of the inverted duty structure. That is the first and foremost demand," said Rajiv Budhraja, director-general of Automotive Tyre Manufacturers Association (ATMA).
The budget will be presented on July 6.
Natural rubber, which makes up 42 percent of the cost of a tyre, attracts customs duty of 20 percent, while duty on the finished product is around 10 percent.
ATMA has requested the government to reduce the customs duty on natural rubber to 7.5 percent.
"We are also looking at increasing the customs duty on tyres," Budhraja told Reuters.
ATMA has asked that customs duty on tyres be increased to 20 percent from 10 percent.
"Concessional customs duty on tyres under RTA (regional trade agreement) is low with no corresponding benefit for natural rubber," leading to an effective rate of customes duty on tyres around 8.6 percent, ATMA said.
Lower customs duty on tyre makes it cheaper to import the finished product in India, than manufacturing it locally.
Source : REUTERS