ATMA seeks duty-free imports of natural rubber to bridge supply gap

The Automotive Tyre Manufacturers’ Association (ATMA) has sought duty-free imports of natural rubber (NR) to the extent of the domestic demand-supply gap in the country.

Nearly 40 per cent of the tyre industry’s natural rubber requirement is met by imports due to non-availability of domestically manufactured NR. The competitiveness of the industry is impacted by the highest rate of duty on the import of NR in India, according to ATMA in its budget wish list.

• Also read: Tyre industry: Voicing over domestic natural rubber

Port restrictions

“The restrictive provisions on NR further add to the woes of the industry. Port restrictions concerning the import of NR need to be removed with immediate effect. Right now, the import of NR is allowed via only two ports, Chennai and Nava Sheva. The pre-import condition on NR import against tyre export obligations needs to be removed as it constrains operations,” ATMA said.

The tyre Industry also asked for urgent measures to curb the burgeoning import of waste tyres in India. ATMA pointed out that the import of waste/scrap tyres has increased by more than five times since FY21. Such indiscriminate import of waste/scrap tyres is not only an environmental and safety concern but also undermines the very purpose of the extended producer’s responsibility (EPR) regulation on Waste Tyres.

• Also read: Natural rubber prices rise to 3-year high on supply constraints

Import of scrap tyres

India has emerged as one of the leading manufacturers of tyres in the world with domestic manufacturing surpassing 200 million per annum. Accordingly, there is enough domestic end of life tyre (ELT) capacity available in the country. The import of waste/scrap tyres into India needs to be restricted through policy measures and, if necessary, allowed only in multiple cut or shredded form, said Arnab Banerjee, Chairman ATMA.

India is on its way to becoming a ‘dumping ground’ of waste/scrap tyres. In FY24 alone, nearly 14 lakh tonnes of waste tyres were imported into the country. These tyres are either resold in the replacement market resulting in unsafe travel or burnt causing environmental degradation.

The issue of Inverted Duty Structure needs to be addressed on priority. While the basic customs duty on tyres is 10-15 per cent, under Free Trade Agreements (FTAs), tyres are imported into the country at even lower duties (preferential duties) while the basic customs duty on its principal raw material, i.e., natural rubber, is much higher (@ 25 per cent or ₹30/kg, whichever is lower).

ATMA also said that a GST rate reduction on key raw materials of tyre industry would help improve economies of scale in the sector, support value addition in the domestic tyre Industry and make Indian tyre exports more competitive globally.