Industry looking for change in inverted duty structure

Automotive Tyre Manufacturers Association, in its pre-budget memorandum to the Finance Ministry, pointed out that tyres in large volumes are finding entry into India while import of raw materials was restricted as a direct outcome of these agreements. Basic customs duty on tyres is 10%, however, under various trade agreements, the duty on tyres ranges between nil to 8.6% facilitating tyre imports into India. While tyres (finished product) can be imported into India at preferential / concessional duties under various trade agreements, rubber (basic raw material) falls in the negative list (no duty concession) across most trade agreements thus impacting the tyre industry both ways. Hence, the government can increase the customs duty on tyres from existing rate of 10% to a higher rate of duty without contravening WTO provisions as there is no bound rate on tyres. The industry is looking to the new government for scrapping of inverted duty structure, so as to make the industry more competitive.

Today the benchmark RSS4 grade rubber closed at `.144.50 a kg at Kottayam, while RSS3 grade closed at `.123.88 a kg at Bangkok and Malaysian SMR20 closed at `.104.78 a kg. On National Multi Commodity Exchange July 2014 closed at `.143.54 a kg, August at `.143.68, September at `.143.10 and October at `.141.87 a kg. On Tokyo Commodity Exchange, July 2014 futures series closed at ¥202.9 a kg, August at ¥205.3, September at ¥208.1, October at ¥210.1, November at ¥212.5 and the contract for delivery in December 2014 closed at ¥214.6 a kg. Tommorrow, the market will be in red and may touch ¥210 a kg level.

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Read lot more in Rubber4U – 15th July 2014 Anniversary issue