Automotive Tyre Manufacturers’ Association (ATMA) has voiced concern over the high US tariffs on tyre imports, saying that the move would put Indian exporters at a significant disadvantage vis-a-vis competing economies.
Competing economies such as China, Thailand, Vietnam, Cambodia and Indonesia continue to attract far lower tariffs, putting India at a distinct strategic disadvantage in its largest export market.
Indian tyres are currently exported to more than 170 countries, of which the US accounts for the single largest share of 17 per cent. In FY 24-25, India’s tyre exports crossed ₹25,000 crore for the first time ever, of which the US accounted for over ₹4,300 crore
Global demand
“The Indian tyre industry has invested over ₹28,000 crore in recent years to expand both greenfield and brownfield capacities to meet rising domestic and global demand. Hike in US tariffs will severely constrain the ability of Indian manufacturers to sustain export momentum established in the last few years, particularly since the US is our largest export destination,” said Arun Mammen, Chairman, ATMA.
The export competitiveness of tyres is already under pressure as the current Remission of Duties and Taxes on Exported Products (RoDTEP) rates for tyres, fixed at 1.3 per cent and 0.8 per cent under advance authorisation, are far below the actual incidence of un-rebated taxes and duties, vis-a-vis 3 per cent under the erstwhile Merchandise Exports from India Scheme (MEIS).
The industry has therefore urged that RoDTEP benefits be raised to 4 per cent and extended to tyre exports under advance authorisation as well. Similarly, the prevailing duty drawback rate of 3.6 per cent for tyres (HSN 4011) falls short of offsetting duties on imported raw materials, which range between 7.5 per cent and 20 per cent. The association has sought an upward revision of drawback rates to 10 per cent to restore competitiveness.
Supply shortfall
Since long, the Indian tyre industry is faced with the challenge of a shortfall in domestic supply of natural rubber, which forces the tyre industry to import nearly 40 per cent of its requirement of natural rubber, a critical raw material for manufacturing of tyres.
ATMA also urged the Government to allow duty-free imports equivalent to the demand-supply gap. The association has drawn attention to the recent exemption of customs duties on raw cotton imports as a precedent for addressing raw material shortages in critical sectors.
“Developing an export market requires years of sustained effort and investment. While the Indian tyre industry has the resilience to explore new geographies, this is a time-consuming process. Immediate policy support will be critical to ensure that India does not lose ground in a highly competitive global market,” Mammen said.
