Govt imposes restrictions on tyre imports

On Friday, India’s government imposed curbs on imports of certain new pneumatic tyres used in motor cars, busses, lorries and motorcycles in a move to promote domestic manufacturing.

“Import policy of new pneumatic tyres…is amended from free to restricted,” the Directorate General of Foreign Trade (DGFT) said in a notification.

Putting the goods under restricted category means an importer would now require a licence or permission from the DGFT for imports. Earlier, the import of these tyres were allowed without any restrictions.

The decision assumes significance as domestic tyre manufacturers have been demanding restrictions on imports. The industry has time and again raised concerns over rising imports of tyres from countries like China.

The restriction was on tyres used in station wagons, racing cars, scooters, multi-cellular polyurethane tubeless tyres, and bicycles.

Imports of these tyres were worth $260.72 million in April-February 2019-20 as against $330.72 million in 2018-19.

The government is taking steps to promote domestic manufacturing and reduce import bill of non-essential goods. The country’s imports dipped by about 10% to $467 billion in 2019-20.

The decision will lend a helping hand to domestic producers who are enable to compete with cheap imports and which have struggled to remain afloat due to inverted duty structure.

Imports of natural rubber attract a whopping 25% import duty which is one of the highest in the world. On the other hand, tyres can be imported at 10-15% duty (and much lesser duties under trade agreements).

Automotive Tyre Manufacturers Association (ATMA) has raised concern saying that the existing restrictive provisions on import of natural rubber adversely affect the Tyre Industry which is already passing through an unprecedented crisis.

According to ATMA, domestic production of natural rubber is woefully deficient and able to meet just 60% of the demand making its imports imperative to run the tyre plants.

Apollo Tyres, Govind Rubber, MRF are likely to benefit from the government’s decision to put certain grades of tyre imports in restricted category.

Also apart from the Tyre players, ancilliaries which supply there products to the tyre sector like Phillips Carbon Balck, NOCIL will also stand to benefit from this judgement as imports are discouraged wherein domestic producers of tyres will benefit ahead.

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